Nick Train has added Manchester United to his Finsbury Growth & Income Trust, the first new holding in two years.
In his August update, Citywire AAA-rated Train said he was ‘delighted’ and ‘relieved’ to make the investment, which he expects to be a ‘very rewarding commitment’ of investors’ capital.
He accessed a block of quoted shares directly from the Glazer family, which has overall control of Manchester United (MANU), and paid just below $17 (£12.80) a share.
Manchester United floated on the New York Stock Exchange at $14 (£10.55) in August 2012 and hit a high of $19.4 (£14.61) in 2014. United’s average share price since 2012 is $16.3 (£12.28).
The football club has a market cap of $2.7 billion (£2.03 billion) but only $700 million (£527 million) is available to portfolio investors.
Train said he regards United’s current market cap as low, ‘relative to the global following and fascination with the MANU franchise and to the priceless (virtually) strategic value to broadcasters of live sports’.
He quoted author James Montague, who wrote in his book The Billionaires Club that US investors see British football clubs as 'entertainment products; a studio from which a never-ending series every bit as engrossing as The Wire or The Sopranos plays out season after season. And the best bit? The network will never cancel it'.
In making his investment in Manchester United, Train highlighted NBA basketball team the Houston Rockets, which was sold for $2.2 billion (£1.66 billion) last month.
He said: ‘If MANU is as valuable as the Rockets – and we think in truth its global reach makes it far more valuable – then it would command a value of well over $5 billion (£3.77 billion); more than double the current market capitalisation. This is the scale of the opportunity we see.’
The Finsbury Growth & Income Trust is trading on a 0.4% premium and has a 1.8% dividend yield. Over three years it has returned 54% on a net asset value (NAV) basis, while the sector average was up 29.5%.