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.