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Nick Train tops up luxury stocks on coronavirus falls

12 February 2020

Star fund manager buys more Burberry, Remy Cointreau and Diageo as the shares fall following the outbreak of the coronavirus.

 

Star fund manager Nick Train has topped up his positions in Burberry (BRBY), Remy Cointreau (RCOP.PA) and Diageo (DGE) after falls in their shares following the coronavirus outbreak.

Both fashion brand Burberry and spirits maker Remy Cointreau suffered double-digit share price falls last month as the coronavirus spread.

Burberry warned last week that the virus was hurting demand for luxury products and has closed 24 of its 64 stores in mainland China, which accounts for 40% of its retail sales.

Remy Cointreau last month posted a sharp drop in quarterly sales while finance chief Luca Marotta said the coronavirus was likely to have a 'significant' impact given China's status as a 'major growth engine' for the business.

Diageo was more circumspect last month when reporting half-year results last month, saying it was too early to judge the impact. Shares in the drinks maker fell 6% last month.

Citywire AA-rated Train said in his latest update to investors in his £6.6bn Lindsell Train UK Equity fund that the stocks, which also feature in Finsbury Growth & Income (FGT) investment trust, had taken 'predictable beatings' on the virus outbreak.

'We took advantage of the panic to add to each,' he said.

'We did so not because we have any insight into the severity and duration of the epidemic. Instead, because we have been rewarded more often than not during previous unsettling episodes by treating them as buying opportunities,' he added.

'We hope we are right again on this occasion and that the distress and suffering the virus has already caused will soon dissipate.'

Train highlighted the strong performance of technology stocks during the month, which has continued into February, which has lifted the fund and trust’s top two holdings London Stock Exchange (LSE) and Relx (REL) to all-time highs.

Both now account for 10% of his open-ended fund each, on the limit of how much Train is able to hold in individual stocks under the City regulator's rules. Finsbury Growth & Income, which held 11% and 10% in the two companies respectively, does not face the same restriction.

'Relx has announced a couple of small but pricey-looking acquisitions in 2020, that add more data or functionality to its digital databases and it is instructive that investors have applauded,' he said.

'It is clear that companies with a credible growth strategy, particularly growth driven by digital technology, remain attractive to investors.'

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