Zen strategy pays dividends

Sometimes it pays to have few investment ideas, says Nick Train, who reveals a few of his favourite stocks.

This week, a professional investor tells us where he'd put his money.This week:Nick Train of Lindsell Train.

Maybe the most unusual thing about Lindsell Train's investment approach is how little we actually do. We almost never initiate new holdings, we almost never sell existing holdings and we do almost no trimming of holdings. In the UK context, we have added only two new positions since 2011 and exited one since 2013. Our long-run portfolio turnover is around 3% per annum.

We make no exaggerated claims for this low-impact approach. Outperforming efficient equity markets is difficult and there are many valid ways to go about it. What you can say about ours, though, is that it tends to keep costs down, while we are clearly taking a very long-term and high-conviction view on our investments.

The honest truth is we have only had three ideas over the last 15 years admittedly big ones and have structured the UK portfolios around them. First, we note that globally resonant consumer brands are rare very rare in the context of the UK stockmarket. But such brands, which really can be sold across the world, are also extraordinarily valuable. Kraft Heinz's merger proposal to Unilever (one of our holdings) earlier this year is another reminder of that value.

We are particularly interested in Burberry (LSE: BRBY), which is the UK's only global luxury brand. The company not only has a wonderful heritage, I also think we Brits underestimate the international appeal of the culture and image of our country, cachet that Burberry encapsulates well.

Next, we are sure the value of whatever attracts eyeballs to the screens of electronic devices is going up. Amazon, Netflix, YouTube all of them are bidding up to get proprietary access to entertainment or information that will draw viewers to them rather than their rivals. We're keen to invest in UK companies with unique intellectual property; the kind individuals or companies feel they can't do without. One example is Daily Mail and General Trust (LSE: DMGT). We know, as does the company, that the days of the print newspaper are numbered. But have investors properly registered the success of MailOnline in reaching a bigger and more global audience than the newspaper has, or ever could?

Finally, we're always bullish on UK equities and that means we like to invest in companies that do well when markets go up. We see Hargreaves Lansdown (LSE: HL), now 36 years old, as still a very "young" company in terms of the value it will bring to ever more customers over time. In short, we think its assets under management will be much higher in ten years, as will its share price.

Recommended

Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
19 Feb 2021
Three British small-cap stocks with big potential
Share tips

Three British small-cap stocks with big potential

A professional investor tells us where he’d put his money. This week: Jonathan Brown of the Invesco Perpetual UK Smaller Companies Investment Trust
8 Mar 2021
Where to find value in the commercial property sector
Investment trusts

Where to find value in the commercial property sector

Commercial property – notably shopping centres and offices – has struggled due to Covid-19. But there are several promising real estate investment tru…
8 Mar 2021
How to invest in tin: a crucial metal whose price is set to soar
Industrial metals

How to invest in tin: a crucial metal whose price is set to soar

The price of tin, a versatile and increasingly important substance, has reached a ten-year high. There are plenty more gains ahead, says Dominic Frisb…
5 Mar 2021

Most Popular

A beginner’s guide to bitcoin: where to store your bitcoins
Bitcoin

A beginner’s guide to bitcoin: where to store your bitcoins

Once you've got hold of some bitcoins, you need somewhere secure to keep them. Dominic Frisby outlines some of the best options, from exchanges to col…
4 Mar 2021
A beginner’s guide to bitcoin: the technical genius behind bitcoin and the blockchain – and how it all works
Bitcoin

A beginner’s guide to bitcoin: the technical genius behind bitcoin and the blockchain – and how it all works

In the second in his series on bitcoin, Dominic Frisby looks at the blockchain – bitcoin’s unique underlying architecture – and what makes it and the …
2 Mar 2021
The great rotation is firmly underway – what does it mean for you?
Stockmarkets

The great rotation is firmly underway – what does it mean for you?

As investors move away from “jam tomorrow” stocks and back into “old economy” stocks that should benefit from the post-pandemic recovery, the tech-hea…
5 Mar 2021