Nick Train and Michael Lindsell plan to be actively involved in managing the Lindsell Train portfolios for at least another seven years.
In the full year results for the Lindsell Train Investment Trust, submitted to the stock exchange today (June 15), chair Julian Cazalet said the trust's manager Lindsell Train Limited has for some years been taking steps to improve the durability of its business with a particular focus on succession.
“Both Nick Train and Michael Lindsell plan to continue to be actively involved in portfolio management and running the business for at least another seven years but since 2010 have built up a strong pool of investment talent,” he said.
Cazalet said there are now five additional members of the investment team, and “all are progressing well and taking on more responsibilities”.
Weak results
The full year results for the trust showed its share price dropped 20 per cent in the year to March 31.
This is in comparison to the trust’s benchmark, the MSCI World Index, which returned 15.4 per cent in the year.
Cazalet said the underperformance is due to the trust’s limited exposure to the tech, energy and financials, the first of which was at the “vanguard of performance in global markets since 2019”.
The only tech firm the trust holds is Paypal, Cazalet said
Secondly, he said, the trust suffered from the lower valuation attributed to the company’s manager, Lindsell Train Limited, in which the trust owns a 24.3 per cent stake.
“Recently, LTL’s funds under management have fallen, largely as a result of net redemptions but also because of the decline in the value of investments held in client portfolios,” he said.
Cazalet added that the company’s holding in the Lindsell Train North American fund has appreciated in value by 41 per cent since the trust invested in it in April 2020, but this is still an underperformance when compared to the MSCI North American index which is up 59 per cent.
Despite this, LTL increased its revenue 6 per cent in the year to January 31, 98 per cent of which come from annual management fees.
Total dividends per share were up to £2,003 per share, compared with £1,817 last year.
Train's displeasure
In his manager’s report, Train said he has been “displeased” by the investment performance the company has delivered for shareholders in the past year.
However, he cited a disconnect between the company’s holdings and the trust’s performance.
“I don't know if this is reassuring to you, [but] we are happy with the business performance of the quoted companies in your portfolio.”
Train reviewed each holding individually in the report, saying he did so as the concentrated nature of the portfolio allowed him to, but also because he wants to highlight this disconnect.
“I believe that a review of the actual business performance and prospects of the companies we are invested in is more promising than the recent performance of their share prices implies,” he said.
