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Lindsell Train falls again, miners restrain FTSE

9 July 2019

Another volatile day of trading in Nick Train's global investment trust erases yesterday's limited rally after Friday's crash.

Another volatile day of trading saw Lindsell Train (LTI) fall again, erasing yesterday's limited rally after Friday's crash.

Shares in the Nick Train managed global trust dropped 13.5% in early trading but clawed some of that back to trade 6.4% or £102 lower at £1,490 by 11am.

The £213 million portfolio's shares are worth 23% less than they were at the start of Friday when Hargreaves Lansdown announced it was removing two popular Lindsell Train funds from its Wealth 50 list of recommendations.

The move has cast a cloud over the valuation of Lindsell Train Limited, the rapidly growing fund management business that accounts for nearly half of the trust's assets.

The decline in the share price has slashed the trust's high rating, reducing its extraordinary 80% premium over net asset value to 51% at Monday's close.

The consistently high share price premium coupled with Citywire AAA-rated Nick Train's underlying investment performance has made Lindsell Train the best performing fund of any type.

Over 10 years until yesterday shareholders had received a total return including dividends of 1,299%, trouncing the FTSE All-Share which has grown 178% and the next best performing global trust, Scottish Mortgage (SMT), which has delivered 730%.

However, there have been repeated warnings from the trust's chairman that the shares were too expensive and vulnerable to bad news.

Ocado stays on track

The FTSE 100 edged lower as weaker copper prices knocked mining stocks, while online grocer Ocado (OCDO) rose after reaffirming annual forecasts.

The UK blue-chip index gave up 25 points, or 0.3%, to 7,524, weighed down by miners. Fallers included:

  • Antofagasta (ANTO) -2.7% to 858p;
  • Glencore (GLEN) -2.5% to 267p;
  • Evraz (EVR) -1.7% to 620p;
  • Anglo American (AAL) -1.6% £21.30.

Investors also awaited a speech from US Federal Reserve chair Jerome Powell due later today, hoping it will give some indication as to whether the central bank will cut interest rates, though expectations have been lowered.

‘With minutes from the last Federal open market committee meeting coming tomorrow, and some other Fed speakers on tap, this is the key period that will either see the Fed crystallise market expectations for a cut later this month, or gently nudge them back towards a more neutral position,’ said Neil Wilson, chief market analyst at Markets.com.

Micro Focus (MCRO) fell nearly 2% to £20.59, after the software company reported lower first half revenue.

Ocado added 5.7% at £12.32, reaffirming its forecast of 10% to 15% revenue growth in the second half, despite the £110 million lost as a result of the fire at its Andover warehouse in February.

‘For all the criticisms of the business, Ocado is doing what it said it would do,’ said AJ Bell investment director Russ Mould. ‘It continues to sign up overseas partners to power their online food operations and the UK operations have been given a new lease of life by striking the joint venture deal with Marks and Spencer.’ 

‘Ocado is investing heavily in tech engineers to ensure the business remains one step ahead, and it is also ploughing money into innovation to remain competitive. This includes buying stakes in third party businesses involved in automated meal preparation and vertical farming.’

On the FTSE 250, Woodford Patient Capital Trust (WPCT) continued to slide, down 2.7% to 55p, as the value of the unlisted stocks held by embattled manager Neil Woodford came under scrutiny.

Analysts at Numis Securities also suggested there was an increasing chance of the investment trust being wound up or passed to a new manager in the fallout from the suspension of Woodford Equity Income

Investment company news brought to you by Citywire Financial Publishers Limited.

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