Nick Train buys Finsbury Growth & Income shares on price decline
'The right thing to do'
Nick Train has topped up his holdings in Finsbury Growth & Income Trust through the coronavirus market sell-off, the manager told investors on Friday.
Train said in a letter to shareholders he had been buying shares in Finsbury in recent days and weeks after its share price fell 34% between 19 February and 18 March to 611p. The stock has since re-rated slightly to 694p as at 10am on 20 March, leaving it on a near-10% discount.
He explained his decision was "not because I believe I will find the bottom - I have already missed it several times...but because nine times out of ten this is the right thing to do - however painful".
Train's FGT outperformance to continue but 2% discount is not yet a 'bargain'
The manager said he was confident of the trust's "long-term strategy of focusing our portfolios on strong companies is going to see us through this crisis", noting many of its holdings have net cash on their balance sheets.
"AG Barr, Burberry (though admittedly some lease obligations here), Celtic FC, Daily Mail, Euromoney, Fever-Tree, Hargreaves Lansdown, Rathbones and Schroders all have net cash," Train said.
Train noted that some of the fund's constituents, such as Rémy Cointreau and Manchester United, will be "more exposed to an economic downturn and both have some, but not excessive, debt".
However, the latter recently announced a share buyback, "signalling confidence in its balance sheet".
And, Train reasoned, "we must hold on to and even add to companies that will do well once we get through to the far side of this".
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Other companies in the portfolio, meanwhile, may see more demand for their services as a result of measures put in place to stem the spread of coronavirus.
"Pearson is holding up well because investors see the possibility of an acceleration in online learning and student registrations, which tend to go up during a recession," he said.
"PZ Cussons has just announced a new CEO, ex Procter & Gamble, and sales of [its handwash brand] Carex, at least, will be going gangbusters."
Elsewhere, train said the asset management companieshe owns "are not only financially secure, but their business model means revenues are highly predictable, even if the quantum of those revenues is lower, temporarily". "And, remember, they are not only invested in equities - bond and multi-asset portfolios will be providing protection."
Train recently told investors in his open-ended UK and Global Equity funds he had taken advantage of recent share price falls to top up a number of holdings.
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