Mixed emotions for Nick Train following month of price moves

In his usual candid style, Train explains the price movements in his portfolio. 

October was a month of mixed emotions, according to star fund manager Nick Train in his latest investor update for the LF Lindsell Train UK Equity fund, a member of interactive investor’s Super 60 list of investments.

In his usual candid style, Train says he agrees that it is irrational to care about short-term share price movements. He notes: “In the short term, prices can be driven by random or irrelevant factors that turn out to have little bearing on the long-term value of a company.”

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Even so, the fund manager says, he finds it hard not to respond emotionally to such short-term moves in price. “When our stocks go up, I feel all is right with the world and I applaud the good sense of the buyers. Contrarily, when they fall, I am affronted by the injustice of it all.”

In October, Train says he experienced both emotional states. On the one hand, RELX (LSE:REL), one of Train’s longstanding holdings, was up by 5% during the month and hit new all-time highs. As a result, its shares have now quadrupled over the past decade.

Meanwhile, a newer holding, Experian (LSE:EXPN), gained 8% in October, and now accounts for around 4.5% of the portfolio.

Other holdings also experienced strong monthly performance. Burberry (LSE:BRBY), for instance, gained by 6% and is now in positive territory for 2021. Heineken (EURONEXT:HEIO) also gained, rising by 4%. The drinks company has been delivering strong earnings despite lockdowns in Asia, one of its main markets, and rising input costs due to the growing popularity of its premium brands.

However, if that made Train feel that “all is right with the world”, he was dispirited by the performance of some of his other holdings.

Unilever (LSE:ULVR) ended the month down by 2%, meaning its year-to-date return is a loss of 8%.

However, according to Train, the performance of London Stock Exchange (LSE:LSEG) was the “most frustrating”. The firm’s share price fell sharply in the last week of October, leaving it down by almost 5% on the month.

Measured year-to-date, the fund has trailed its sector average. Since the start of the year, Lindsell Train UK Equity has returned 11.2%. In contrast, the Investment Association’s UK All Companies sector has returned 17.2%.

In March, Train asked investors to be patient as short-term performance started to come off the boil.

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Train, however, is not unnerved by the short-term performance numbers and is continuing to invest with a long-term mindset. On that front, he named digital products and services, luxury and premium consumer brands, and trusted wealth management services as “three of the big money-making opportunities of the next decade and longer”.

Over five years, the fund is comfortably ahead of its sector, up 67.3% versus 43.3%.