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LTI - Lindsell Train Investment Trust PLC - What's going on

Investment discussion for beginners. Why you should invest your money, get help getting started
mark88man
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LTI - Lindsell Train Investment Trust PLC - What's going on

#220565

Postby mark88man » May 9th, 2019, 11:09 pm

Hello

Long time lurker - more active on TMF. Just hoping for some opinions

For my children's university portfolio, now in its last legs as the money has been used (3 down 1 to go) I constructed a blended portfolio to cover short term and medium term needs (nothing really long term). An element of which was in LTI. In my head this was the sensible IT for boring but with growth potential. My plan was to the divest the funds equally to keep it balanced (some IT, some prefs, some funds), however for structural reasons, ie my youngest sons money was in a JISA I couldn't touch that it has ended up 100% in LTI

My dilemma (and I know its a nice one to have) is that LTI has gone all bitcoin, by which I mean it has nearly doubled since this time last year (and had doubled over the previous 3 years), and I can't see any reason why it should be this buoyant given its investment goals (which are admittedly a concentrated portfolio of blue chips). Does anyone in the know have any more background as to whether this is purely good investment returns, or an element of financial engineering exists, or some other reason

so far I have resisted taking the profits, but it seems very bubble like and I'm worried it will pop. so I am looking for some opinions on why it may be behaving like this, and some options for how you would tackle it (ie sell and don't look back, sell half, or keep watching!!

I seem to recall lootman has referenced LTI as a favorite so grateful for your view if you read this board

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220569

Postby mark88man » May 9th, 2019, 11:32 pm

Hello

This was a little helpful especially the large (45% of assets in Lindsell Train Ltd)

https://www.moneyobserver.com/news/lind ... ors-buying

Suggesting that there is hidden value in this holding

Still keen on strategies - the trading record seems equally split between sells and buys but what does that mean

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220592

Postby Lootman » May 10th, 2019, 8:11 am

mark88man wrote:I seem to recall lootman has referenced LTI as a favorite so grateful for your view if you read this board

My position in LTI is now up about 900% since I bought a decade or so ago. Admittedly my timing was good (lucky) in that I bought at the bottom of the last bear market. But even so the returns have been astonishing. In fact it is up by more than any individual share holding that I have, which is remarkable for a collective.

And even as the market has flattened over the last year or so, this puppy just keeps going on and on. The large share in its very successful parent company is obviously the main driver and so LTI is really a bet on that at this point.

Whether I should trim some back is an obvious question. Sadly I chose to buy this for my taxable account rather than my ISA, and the pregnant capital gain is about four years' worth of annual CGT allowance. So selling some or all of it would be painful as well.

I think I will do nothing. Too bad there is no way to hedge it though.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220618

Postby mark88man » May 10th, 2019, 10:29 am

Thanks lootman - 900% is a nice problem to have

I have had a chat with my son, and he wants to let our position run a little (the folly of youth), but using the adage "its ok to put all your eggs in one basket, so long as you watch the basket very carefully" we will end up well up (if not optimum) whatever.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220627

Postby mc2fool » May 10th, 2019, 11:24 am

mark88man wrote:In my head this was the sensible IT for boring but with growth potential.
:
My dilemma (and I know its a nice one to have) is that LTI has gone all bitcoin, by which I mean it has nearly doubled since this time last year (and had doubled over the previous 3 years), and I can't see any reason why it should be this buoyant given its investment goals (which are admittedly a concentrated portfolio of blue chips).

While one has to acknowledge it's done very well for its investors, it's far from the "boring" type of IT you describe and the major concentration isn't really in blue chips but in a circular relationship with itself. I can't think of any other IT that's anywhere near like it.

47% of LTI is in Lindsell Train Limited, it's own management company, which is 73% owned by Messrs Lindsell & Train, 3% by staff and the remaining 24% by LTI*.

As such, investors in LTI are, in effect, investing in Messrs Lindsell & Train but not in the "normal" way of as fund managers for the fund (IT) itself, in the way folks might buy a, say, Woodford fund, 'cos they want his stock picking and fund management skills within his fund, but are actually investing, well, 47% at least, in Lindsell & Train's fund management business skills for (mostly) other funds.

Lindsell Train Limited has ~£18bn under management, of which LTI is just £188m, i.e. 1% -- and of course almost half of that is in LTL. And LTI is currently running at a premium of 102%!!!! And that's up from a low of a mere 9% just 18 months ago.**

So, investors in LTI are really putting a huge amount of faith in Messrs Lindsell & Train with their fund management business. That's clearly been justified so far, even if you go just by NAV performance (10YR TR 636%, vs share price TR of an even more stonking 1536%).

Whether that faith will continue to be justified, well, my crystal ball is a little cloudy at the moment so I wouldn't care to opine on that :D, but either way, one has to acknowledge that LTI is a unique and very curious beast...

* https://www.lindselltrain.com/about-us/ ... iness.aspx
** https://www.theaic.co.uk/companydata/BWSAG/performance

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220652

Postby hiriskpaul » May 10th, 2019, 1:08 pm

LTI does sound like a very odd IT. I would look at this from a different perspective than focussing on past performance of the IT though. By the sound of it, the investment will be used to help fund University, so you are intending to sell at some point. Given the horizon you have, is LTI a suitable investment to hold right now? Or in other words, if you were investing now with particular goals in mind, would 100% in LTI be an appropriate investment? I suspect not, but don't really know enough about your goals and circumstances.

I always try to forget what I paid for an investment and what gain/loss I might have made, apart from tax consideration. That information is useless in deciding what to do for the future and can cloud your judgement.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220654

Postby mark88man » May 10th, 2019, 1:23 pm

So thank you for those links - the reports were very helpful. I agree that I may have stumbled into something a bit spicier than I thought

Having read more of the reports, it feels like the cash equivalent of the severn bore. The underlying LT funds (£18bn) have grown substantially in the last few years, and this is pushing dividends and returns into LTL (the management company), which the investment trust LTI is then benefiting from, both in creating a justification for the NAV premium (although the company is clear about the risks), and reflecting the potential for further value increases in the LTL company forming 50% of the trust

Like a souffle it will keep rising whilst it does, but there is a need to be careful that when it falls it might be catastrophic. However with 4 months until the next reporting period, and a generally benign to flat global view, I think I will be careful but delay taking any action for now.

For Hiriskpaul - the fuller story is the DS2 isn't going to uni for poor health reasons, but I didn't want to clutter my OP. You are correct though, in that we now need to agree what his investment needs are. My priority is for him to have some asset base, without frittering it away - yet he is unlikely to be able to work for a while, so there will be some short term needs. At the moment he is using savings from his last job to help with his personal spending - other than that we are looking after living costs. This means that the most likely next step is to sell 1 (we have 6!) and that will be enough for 6-9 months - so I think its still a short to medium term outlook. The likely major expense will be driving lessons and a runaround, but that won't be for a while either.

Thanks again all

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220961

Postby Hariseldon58 » May 11th, 2019, 7:55 pm

The problem is that the gain is circular, good performance, cult managers, sentiment goes wildly optimistic..... it only takes one stumble for the same circular relationship to become destructive.

Play the mind game, turn the clock back 5 years ago, replace “Lindsell Train” with “Neil Woodford” back to today, how would such an IT look owning a substantial stake in Woodford Investment Management ?

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#220984

Postby Lootman » May 11th, 2019, 9:35 pm

Hariseldon58 wrote:The problem is that the gain is circular, good performance, cult managers, sentiment goes wildly optimistic..... it only takes one stumble for the same circular relationship to become destructive.

Play the mind game, turn the clock back 5 years ago, replace “Lindsell Train” with “Neil Woodford” back to today, how would such an IT look owning a substantial stake in Woodford Investment Management ?

If there is a difference it is that Woodford was a yield hog. He would do well as long as higher yielding assets were prevailing but that is, of necessity, a game that will turn on you.

Whereas Train seeks qualitative factors, as does Terry Smith, and I have far more confidence that that is a non-cylical trend. Those two guys invest like I do, only better. And you rarely get a chance to be on the inside for those types of operations. Try buying into Fidelity or Vanguard for instance - also both private and unquoted. I cannot think of another listed security that gives you essentally an "inside partner" exposure to an outstanding fund manager. Well, maybe Blackstone, but that is another whole ball of wax.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#221611

Postby stevensfo » May 14th, 2019, 4:53 pm

Lootman wrote:
mark88man wrote:I seem to recall lootman has referenced LTI as a favorite so grateful for your view if you read this board

My position in LTI is now up about 900% since I bought a decade or so ago. Admittedly my timing was good (lucky) in that I bought at the bottom of the last bear market. But even so the returns have been astonishing. In fact it is up by more than any individual share holding that I have, which is remarkable for a collective.

And even as the market has flattened over the last year or so, this puppy just keeps going on and on. The large share in its very successful parent company is obviously the main driver and so LTI is really a bet on that at this point.

Whether I should trim some back is an obvious question. Sadly I chose to buy this for my taxable account rather than my ISA, and the pregnant capital gain is about four years' worth of annual CGT allowance. So selling some or all of it would be painful as well.

I think I will do nothing. Too bad there is no way to hedge it though.


Is there a big difference between the IT (LTI) and Linsell Train Global Equity Fund? The IT is 1700 pounds for one share and according to Interactive Investor is at a premium of 80%. According to the figures, both have performed amazingly well. I only ask because I've held the fund for quite some time and have just discovered about the IT. Any advantage of one over the other?

Steve

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#221621

Postby doug2500 » May 14th, 2019, 5:04 pm

Yes there is, a big difference. It's all above ^^^^^^^^^^^^^^^

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#221857

Postby Backache » May 15th, 2019, 5:46 pm

Lootman wrote: Try buying into Fidelity or Vanguard for instance - also both private and unquoted.

Pretty sure that Vanguard is mutually owned rather than private.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#221880

Postby Lootman » May 15th, 2019, 7:09 pm

Backache wrote:
Lootman wrote: Try buying into Fidelity or Vanguard for instance - also both private and unquoted.

Pretty sure that Vanguard is mutually owned rather than private.

It is, but I regard that as a form of being private. I suppose you could argue that you can become a de facto shareholder by buying one of their funds. But unlike LTI you don't actually participate in Vanguard's profits that way. You merely see a reduction of your fund's expense ratio.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#225078

Postby mark88man » May 28th, 2019, 9:39 pm

so in the weeks between these posts LTI has shot up to £1970 backed straight down to low £1700s and is back up to £1900 now.

I am just back from a week away and this volatility is a little scary, so I may try the sell half for the short term and keep half for the medium (2-3 years) up to the US election as a date to keep an eye on

thanks all again

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#226709

Postby Lootman » June 4th, 2019, 9:39 am

mark88man wrote:so in the weeks between these posts LTI has shot up to £1970 backed straight down to low £1700s and is back up to £1900 now.

I am just back from a week away and this volatility is a little scary, so I may try the sell half for the short term and keep half for the medium (2-3 years) up to the US election as a date to keep an eye on

It doesn't trade much. For instance today's trading volume so far is just 74 shares. So an order of any size can move the price. It's best not to look at its price on a day-to-day basis. I look at the price every few months or so. Checking today I see I am up tenfold in about a decade.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#243868

Postby Cookie » August 12th, 2019, 9:42 pm

Big drop in share price and premium to NAV, Woodford backlash?

Buying opportunity?

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#243896

Postby SalvorHardin » August 13th, 2019, 7:04 am

Lootman wrote:Whereas Train seeks qualitative factors, as does Terry Smith, and I have far more confidence that that is a non-cylical trend. Those two guys invest like I do, only better. And you rarely get a chance to be on the inside for those types of operations. Try buying into Fidelity or Vanguard for instance - also both private and unquoted. I cannot think of another listed security that gives you essentally an "inside partner" exposure to an outstanding fund manager. Well, maybe Blackstone, but that is another whole ball of wax.

Given the situation with Neil Woodford’s funds, it’s no surprise that the market is a bit jittery about the value of fund management groups with a “star” manager so LTI's share price has become a bit more volatile in the last few months.

But Lindsell Train, unlike Woodford, isn’t holding large amounts of illiquid investments in its open-ended funds. This illiquidity is what’s caused the problem for Woodford; it’s impossible for his funds to meet the level of redemptions which in turn has fuelled the demand for more redemptions in a similar manner to a bank run. Once you get into this position, it’s difficult to get out of it because buyers know that you’re a distressed seller so you get worse prices when you sell (and the existence of a distressed seller of big stakes will depress the price anyway).

If I owned shares in LTI, or was looking to buy, I’d start with the assumption that LTI’s shares without its stake in Lindsell Train would trade at its NAV. So the premium to NAV is the value that the market puts on this stake. It’s a reasonable assumption to make given that the most directly comparable investment trust to LTI, Finsbury Income & Growth (FGT), is managed by Nick Train and its shares generally trade within a couple of percentage points of NAV. Looking at LTI’s most recent factsheet, FGT has a very similar portfolio to LTI.

As to investing in quoted management companies, the one that springs to mind (I’ve owned shares in it for many years) is the Canada real asset specialist Brookfield Asset Management. Anyone who’s looking to diversify away from the UK and increase their infrastructure portfolio could do a lot worse than look at Brookfield.

Blackstone is a lot more investable for UK investors nowadays because it changed from an LLP to a corporation last month, which removes the need to complete a K-1 form (and thus a tax return) for America’s IRS.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#243908

Postby bjmarren » August 13th, 2019, 8:00 am

As to investing in quoted management companies, the one that springs to mind (I’ve owned shares in it for many years) is the Canada real asset specialist Brookfield Asset Management. Anyone who’s looking to diversify away from the UK and increase their infrastructure portfolio could do a lot worse than look at Brookfield.


Hi SalvorHardin,

Thanks for highlighting Brookfield Asset Management (BAM) again. I know from some of your previous posts that you rate BAM as a stock well worth investigating for those who are interested in diversifying their portfolio. The drawback for me as an investor is that I don't live in the UK and cannot benefit from ISAs and such like, so I would presumably fall foul of withholding taxes. I've subscribed to Seeking Alpha and BAM often features in articles there, but I don't pretend to understand alot of what I read. I've also been looking at Middlefield Canadian Income Trust (MCT), and notice that one of its holdings is Brookfield Property Partners LP, which I assume is a part of the larger BAM, so it could be a convenient way of investing in BAM to some extent. What would be you view on this?

Brendan

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#243914

Postby SalvorHardin » August 13th, 2019, 8:38 am

bjmarren wrote:Thanks for highlighting Brookfield Asset Management (BAM) again. I know from some of your previous posts that you rate BAM as a stock well worth investigating for those who are interested in diversifying their portfolio. The drawback for me as an investor is that I don't live in the UK and cannot benefit from ISAs and such like, so I would presumably fall foul of withholding taxes. I've subscribed to Seeking Alpha and BAM often features in articles there, but I don't pretend to understand alot of what I read. I've also been looking at Middlefield Canadian Income Trust (MCT), and notice that one of its holdings is Brookfield Property Partners LP, which I assume is a part of the larger BAM, so it could be a convenient way of investing in BAM to some extent. What would be you view on this?

Brendan

Hi Brendan. You get caught for withholding taxes on overseas dividends even if you hold BAM in an ISA (they can't be reclaimed in an ISA). Dividends arrive net of withholding tax.

The easiest way to view BAM is that it is an investor-manager, whereby it invests its own money and that of its clients in a variety of funds (some of which are quoted). The underlying investments are real assets; commercial and residential property, power generation and distribution, roads, ports, etc.

LTI benefits in a similar way. LTI has its own investments but it also indirectly gets fees from managing Lindsell Train's clients' investments through its stake in Lindsell Train. Like LTI, BAM trades at a substantial premium to its quoted NAV because of these management fees.

Brookfield Property Partners (BPY) is one of the quoted funds that BAM runs (BAM owns roughly 54% of BPY). BPY is a limited liability partnership so the tax situation gets a bit tricky as LLP distributions are treated self-employment income. I've never considered BPY as an investment because of this. Fortunately BAM is a corporation so there's no need for a separate tax return.

https://seekingalpha.com/symbol/BPY?s=bpy

I don't know much about Middlefield Canadian Income Trust, except that it is reasonably popular on TLF so someone may be along soon to comment on it.

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Re: LTI - Lindsell Train Investment Trust PLC - What's going on

#243929

Postby Dod101 » August 13th, 2019, 9:26 am

With Finsbury Growth and Income I take SalvorHardin's point but they (FGI) are quite prepared to issue new shares to meet demand for their shares and so help to keep them from going to a premium. The chairman regularly mentions that in his Annual Report so the situation is not I think quite comparable. I appreciate that this is a side issue to the main topic.

Dod


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