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Lindsell Train doubles Hargreaves stake to 10%

6 February 2019

Investment firm of star fund managers Nick Train and Michael Lindsell doubles position in UK's biggest broker to become Hargreaves Lansdown’s leading external shareholder.

Lindsell Train, the investment firm launched by star fund managers Nick Train and Michael Lindsell, has doubled its position in Hargreaves Lansdown (HRGV) to become the fund platform’s biggest external shareholder.

Citywire AA-rated Train and AAA-rated Lindsell are long-standing fans of the Bristol-based broker and ploughed an estimated £374 million into its shares after the sell-off at the end of last year.

According to a stock exchange notification today, Lindsell Train funds and investment trusts hold 10.2% of Hargreaves Lansdown shares, up from just over 5% in August.

Since the end of September shares in the FTSE 100 company have tumbled 23% from £22.62 to £17.33 during the toughest period for global markets since the financial crisis.

Today's disclosure shows Lindsell Train exceeded the 10% threshold on 29 January after Hargreaves shares slid further following half-year results.

These showed assets under administration falling 6% to £85.9 billion, their first decline in seven years, prompting chief executive Chris Hill to complain, ‘times are pretty tough out there. These are horrible conditions for investors’.

In the past week, however, the shares have risen from a low of £16.33 as markets have rallied, valuing the Bristol-based company at £8.1 billion.

The stock purchases see Lindsell Train leapfrog rival fund managers BlackRock and Baillie Gifford to become the biggest shareholder after founders Peter Hargreaves and Stephen Lansdown. 

The operator of the Vantage fund platform was already the largest holding in the Lindsell Train UK Equity fund ahead of the transactions.

The wealth manager is the fourth largest holding in Lindsell Train’s £1.4 billion Finsbury Growth & Income (FGT ) equity income investment trust, although it has not been in Lindsell Train (LTI ), a smaller investment trust that owns a lucrative stake in the unlisted shares of the fund managers' firm.

A spokesperson for Lindsell Train had not responded to a request for comment at time of publication.

Lindsell Train's stake building follows its UK Equity and Global Equity funds suriviving a cull of Hargreaves Lansdown’s Wealth 150 top funds list.

A place on the recommended funds list is highly prized by fund managers who can greatly boost fund sales to investors. This was much to the annoyance of rival star fund manager Terry Smith who has continued to see his top-performing Fundsmith Equity fund excluded because he refuses to lower his annual management charge to gain entry on the platform.

Train is a long-term backer of Hargreaves Lansdown. His conviction in the shares puts him at odds with City consensus, with Barclays analysts alone in rating them a 'buy', on a £20.14 target versus the median £17.05, according to Refinitiv Eikon.  

Writing in his regular fund update in June last year, Train noted that alongside Burberry (BRBY), Fidessa (FDSA), the London Stock Exchange (LSE) and Daily Mail and General Trust (DMGOa), Hargreaves Lansdown had been one of his strongest holdings over six months.

‘All of these we have seen characterised as “expensive” in recent times,’ he said. ‘Hargreaves with its long standing P/E in the high 20s has outraged value investors for many years. But the fact is it is the success of the strategies of these companies – strategies with technology at the heart of them – that has mattered much more to stock market investors than the valuations.’   

In other commentary last year Train said Hargreaves’ telephone service ‘builds trust’ in the brand, ‘which is exceptionally valuable for accounting and financial service franchises’.


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