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Nick Train: Amazon's Kindle Fire will set equity values alight
by Kiran Moodley on Nov 23, 2011 at 15:44
Nick Train, manager of the CF Lindsell Train UK Equity fund and the Lindsell Train Investment Trust, says that Amazon's launch of the Kindle Fire will speed up the creation of a global digital world that will be far more signifcant on long-term equity values than the eventual denounement of the Greek tragedy.
Amazon profits dropped 73% after the company invested heavily in the Kindle tablet, but esteemed investor Train believes the internet retailer can recover.
Train also says that despite the prevailing macroeconomic gloom, he will go into 2012 'moderately bullish,' and believes Amazon's Kindle Fire could be a significant driver of investor returns.
Train, who recently spoke about his 6% stake in Scottish football side Celtic, has positioned 85% of his trust's assets in equities and sees them as ripe for returns over the next year given the catastrophic time they have recently endured.
Train argues that between 31 October 2007 and March 2009 the MSCI World Equity Index has fallen from 1,682 to 688, a decline of nearly 60%, but now he expects them to recover.
'With each passing month from that low capital market activity edges toward normality,' Train explained. 'Over the nine months to the end of September 2011 there have been 20,500 corporate deals worldwide, with an aggregate value of £1.8 trillion. Those totals are, respectively, 7% and 20% higher than over the comparable period in 2010 and 2009,' Train (pictured) added.
Train also sees strong global brands as extremely valuable in this context, espeically ones that offer a credible entrance point into emerging economies.
Unileveris a good example of this,Train says, because in the Netherlands and the UK the avareage person spends around €44 a year on the company's products, with the potential for emerging markets like Indonesia, India and Nigeria to follow this trend.
'This emerging market story is still only just starting and has the power to drive profits and share prices for many major global corporations,' Train said.
Similarly, Train says the announcement of Amazon's new tablet could be a momentous moment, which will increase and expand the digital world and software consumption as more and more analogue activities go online.
Train confidently states that 'our bet is that the Amazon announcement will be looked back on in five years time as way more signifcant for its impact on long term equity values, than the eventual denounement of the Greek tragedy.'
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