Why Train is buying more Hargreaves Lansdown shares

Why Train is buying more Hargreaves Lansdown shares

The manager of Lindsell Train’s £3bn UK Equity fund has said he has recently purchased more shares in Hargreaves Lansdown, despite the value of the FTSE firm falling over the past year.

Speaking to FTAdviser, Nick Train said there have been some “pronounced shifts” in the relative prices of companies he owns within the portfolios.

“Certain companies have fallen too much, and we have been happy to build up existing holdings there, but there has been no brand new idea.”

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The Lindsell Train co-founder, who also runs the £2.1bn Lindsell Train Global Equity fund and the £919m Finsbury Growth & Income trust, said one of the companies which he thinks have fallen too much is Hargreaves Lansdown.

The FTSE 100 wealth manager has seen its share price fall 16 per cent over the past year.

Mr Train said: “To a degree, this is a traditional reaction to the uncertainty people feel at the moment,” adding hesitant markets have caused the investment prospects of a company that transacts investments to “not look so attractive”.

“There has been a strong preference for companies with significant overseas earnings, and I think Hargreaves must be as close to 100 per cent domestic as you can get, which I suspect has had an influence on the price as well.” 

The fall in the price of Hargreaves spurred Mr Train to buy more shares for his UK Equity fund, and the portfolio currently has a 5.8 per cent exposure to the FTSE firm, making it the ninth largest holding in the fund.

“The future is radically uncertain but the only thing that has ever worked for us is buying shares of very good companies when the prices fall, and Hargreaves is a very good company.”

Despite this, Mr Train said he rarely makes changes to his holdings and has not bought anything new or sold out of anything in response to events of the past nine months.

He estimated it has been four years since he completely sold out of a company.

Mr Train said: “We earn great businesses and you should never sell out of a great business.”

This comes after Mr Train told FTAdviser he invests in a "very emotional way", making him reluctant to sell-out of companies he owns.

The Lindsell Train UK Equity fund has consistently outperformed its peer group, returning nearly 37 per cent over three years.

This is nearly double the returns of the IA UK All Companies sector, which has scooped up 16.4 per cent over the same period.

Commenting on his performance, Mr Train said he has “no idea” if his good performance will continue.

“The one thing we do that is apparently different compared to others is how low our portfolio turnover is,” he said, adding the turnover has averaged at less than 5 per cent a year. 

“It’s a conviction borne of bitter experience that we can best earn returns for our clients by participating in the long-term growth of the companies we are invested in, as opposed to trading in and out of them and taking profits here and there.