Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

AA-rated Train becomes biggest Rathbones shareholder

1 Comment
AA-rated Train becomes biggest Rathbones shareholder

Citywire AA-rated Nick Train has upped his stake in Rathbones to become the largest single shareholder in the company, as its share price continues to hover close to an all-time high.  

Train increased his investment in the company from 4.02 million shares to 5.16 million or 10.81% of the market-cap worth £107 million at a share price of £20.75p.That puts him just ahead of BlackRock on the shareholder register, with 4.36 million shares.

Rathbone Brothers is just off from an early June high of £21.66 and remains 145% up over the last five years versus a FTSE 350 return of 44% over the same period.

Speaking to Wealth Manager in May Train credited the company’s ‘advantageous’ purchase of up to £2.8 billion in funds from Jupiter and Tilney at a cost equivalent to less than 3% of assets.

‘Ostensibly this looks an attractive ratio because, before the deal was announced, Rathbones itself was being valued at circa 3.9% of its funds under management – implying the value of the funds acquired could double over time for Rathbones shareholders,’ said Train.

‘What’s more, we don’t think it too much of a stretch to argue that for a business of the calibre of Rathbones – a calibre strongly endorsed by the fact it was Rathbones that was able to close these deals at this price and not its rivals – that an appropriate rating for its funds under management might be closer to 5% of the total.

‘There is every reason to expect Rathbones to continue to grow, organically and by acquisition; its relative scale, credibility in consolidating complementary businesses and its nicely rising long-term share price all making it an attractive partner.’

The company trades at a relative premium at 13.8 times 2015 earnings versus a peer-group median of 10.6 times, although this is primarily due to its growth characteristics. On current business Rathbones trades at a 5.2% discount, on a price-to-book of 3.1 versus the median 3.5.

This was borne out by the first half of 2014 as the company grew its assets under management by £1.5 billion or 14.3% to a total £23.9 billion, versus 9.4% growth over the same period of 2013. Organic asset growth stood at 12.2%, with earnings per share rose 33.7% to 51.6p.  

Canaccord and Liberum have both recently confirmed their buy ratings on the stock with price targets of £21.60 and £22.14 respectively.

The shares are held in Train's £1.05 billion CF Lindsell Train UK Equity fund.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Boutique tapes: my business will never be sold

Boutique tapes: my business will never be sold

In the final part of our four part series we discuss consolidation and whether it's getting tougher for boutiques to survive.

Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Read More
Your Business: Cover Star Club

Profile: how this boutique beat the big guns of wealth

Profile: how this boutique beat the big guns of wealth

This small west country offshoot of a local IFA scooped a 2018 Citywire award from beneath the noses of the national challengers

Wealth Manager on Twitter