View the article online at http://citywire.co.uk/money/article/a637885
Lindsell Train investors 'hope' deal frenzy pays off
Citywire AAA-rated Nick Train backs corporate takeovers by a trio of beverage businesses he holds in the Lindsell Train investment trust.
One of the best performing investment managers in Britain is betting against the conventional view that corporate acquisitions are usually damaging to the bidding company, telling investors that three drinks makers representing 27% of the Lindsell Train investment trust are buyers.
Barr, Diageo and Heineken are engaged in or have recently closed major strategic transactions, Citywire AAA-rated Nick Train notes in a half year report to the stock market: ‘Combined, these three account for 27% of your portfolio - so we better hope that the conventional wisdom about deals is wrong.’
Train has a strong track record of getting it right since co-founding the Lindsell Train trust in 2000: over three years, the fund has returned 68%, while over the six months to the end of September the trust has returned 28.4% versus a benchmark return of 1.9%.
Train, who had previously said he was ‘inclined’ to endorse the AG Barr-Britvic merger, offered his endorsement for the deals ‘despite some high prices being paid’.
‘In truth, we find ourselves applauding the acquirers,’ he wrote in the company’s half-year statement.
‘In all three cases the shares have responded well to the corporate activity, with both Diageo and Heineken up a quarter or more in calendar 2012, as investors welcome the increased exposure to Emerging Market consumers and Barr up a still very useful 15%.’
‘Perhaps our euphoria and that of other investors, will wear off and the premium price that Heineken, in particular, has paid to win Asia Pacific Breweries (APB) will come back and bite its ambitious board and shareholders.
‘But, on balance, we think the lesson is that companies are right to take the risk, because strategic opportunities of this importance come up so rarely and need to be grasped with both hands.
‘A tough tide for the global economy means that strong companies can get transactions done, transactions that would simply not be available in happier times.’
News sponsored by:
Here at BlackRock, we help investors make more out of commodities with a range of innovative, flexible and resilient investment strategies.
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
Look up the fund managers
More from us
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.
by Gavin Lumsden on Oct 23, 2016 at 00:01