| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 2.9% | 9.3% |
The Lindsell Train North American Equity Fund delivered a 2.9% return in Q3 2024, bringing year-to-date performance to 9.3%, though trailing the MSCI North America Index. The concentrated portfolio of 20-30 stocks is heavily weighted toward financials, technology, and consumer staples. The manager provides extensive commentary on T. Rowe Price, the fund's only asset manager holding, which has underperformed significantly over four years despite being one of the largest active managers in the US with $1.6 trillion under management. While acknowledging industry headwinds from the shift to passive investing and fee pressures, the manager believes T. Rowe's scale, 30% operating margins, and strong dividend history position it for potential double-digit returns. The company's 4.5% dividend yield and billion-dollar annual buybacks support this thesis. Key contributors in September included FICO, Oracle, and Equifax, while Alphabet, Intuit, and Adobe detracted from performance. The manager maintains conviction in the concentrated approach despite recent underperformance.
The fund maintains a concentrated portfolio of 20-30 North American companies, with particular emphasis on T. Rowe Price as the sole asset manager holding, believing its scale, brand strength, and US equity expertise will drive long-term outperformance despite industry headwinds.
The manager expects high-single-digit earnings growth over the longer term for T. Rowe Price, driven by market growth, flat relative performance, flat-to-positive net flows, minus fee compression, plus operating leverage. At current valuations, probability favors the long-term investor in T. Rowe's equity.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Oct 20 2024 | 2024 Q3 | ADBE, AXP, DIS, EFX, EL, FICO, GOOGL, INTU, ORCL, PYPL, SPGI, TKO, TROW, V | Asset Management, Concentration, dividends, financials, technology, value | TROW | Lindsell Train's concentrated North American fund returned 2.9% in Q3 but trails benchmarks year-to-date. The manager doubles down on T. Rowe Price despite four years of underperformance, citing the asset manager's scale advantages, 4.5% dividend yield, and potential for double-digit returns as passive investing headwinds are already reflected in the depressed 12x earnings multiple. |
| Jun 30 2024 | 2024 Q2 | ADBE, AXP, DIS, EFX, EL, FICO, GOOGL, INTU, NKE, ORCL, PYPL, SPGI, TKO, V, VRSK | AI, Athleisure, Concentration, consumer discretionary, large cap, North America, technology, valuation |
ADBE NKE |
Lindsell Train's concentrated North American fund underperformed in Q2 as tech volatility dominated. Adobe surged 25% on AI monetization success while Nike fell 20% on competitive pressures and guidance disappointment. The manager maintains conviction in quality businesses with genuine moats, viewing current Nike valuation as attractive for long-term compounding despite near-term headwinds. |
| Jun 7 2024 | 2024 Q1 | 4503.T, PEP, TKO | Compounding, long-term, Patience, Quality, turnover |
PEP 4503.T TKO |
Lindsell Train advocates for patient, long-term investing in high-quality compounding businesses. Despite paying premium valuations, their portfolio companies grow dividends at 11% versus 6% market average. With sub-5% annual turnover and decade-plus holding periods, they've generated strong returns including a 15-fold gain from WWE despite significant interim volatility. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2024 Q3 |
Asset ManagersT. Rowe Price represents the only asset manager holding in the portfolio, facing industry headwinds from the shift to passive investing and fee pressures. Despite these challenges, the manager believes T. Rowe's scale, brand strength, and US equity expertise position it well for long-term resilience and potential double-digit shareholder returns. |
Asset Management Fee Pressure Active Management Scale Brand |
| 2024 Q2 |
AIAdobe's AI capabilities are expanding their addressable market by bringing in more users while upselling existing ones. The company has been able to monetize its AI investments, which is only possible for businesses with differentiated products and genuine moats. Adobe credits AI with assisting and amplifying human ingenuity and enhancing productivity. |
Generative AI Productivity Creative Software Monetization Differentiation |
AthleisureNike experienced volatility due to the pandemic's working-from-home leisurewear boom, with its EV/sales multiple rising from 3x to 5x before settling back under 2.5x. The company faces challenges from new competitors like On Running and Hoka taking market share in the US running shoes segment. Despite missteps in digital strategy, Nike maintains strong positions in most geographic footwear sub-markets. |
Athletic Footwear Market Share Competition Digital Strategy Brand Positioning | |
| 2024 Q1 |
QualityThe fund focuses on high-returning businesses that compound earnings and dividends at above-market rates. Their portfolio companies have sustained an internal rate of compounding at nearly double the rate of the average company, with dividends per share compounding at approximately 11% versus the wider market average of 6%. |
Quality Compounding Dividends Earnings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2024 | Fund Letters | Lindsell Train | TROW | T. Rowe Price Group Inc | Financials | Asset Management & Custody Banks | Bull | NASDAQ | Active management, asset management, contrarian, Dividend Growth, Fee Compression, operating leverage, Scale Advantages, US equities, Value | Login |
| Jun 30, 2024 | Fund Letters | Lindsell Train | ADBE | Adobe Inc. | Information Technology | Application Software | Bull | NASDAQ | AI, creative software, digital media, generative AI, recurring revenue, SaaS, Software Moats | Login |
| Jun 30, 2024 | Fund Letters | Lindsell Train | NKE | Nike, Inc. | Consumer Discretionary | Footwear | Bull | NYSE | Athletic Footwear, Brand Power, Consumer Discretionary, Cyclical, Free Cash Flow, market share, valuation compression | Login |
| Apr 1, 2024 | Fund Letters | Lindsell Train | PEP | PepsiCo | Consumer Staples | Soft Drinks | Bull | NASDAQ | Beverages, consumer staples, Dividend Growth, Long-Term Compounding, Quality, Snacks, Valuation Cycles | Login |
| Apr 1, 2024 | Fund Letters | Lindsell Train | 4503.T | Astellas Pharma | Health Care | Pharmaceuticals | Bull | Tokyo Stock Exchange | Dividend Growth, healthcare, Japan, Long-Term Compounding, pharmaceuticals, Quality, Valuation Cycles | Login |
| Apr 1, 2024 | Fund Letters | Lindsell Train | TKO | TKO Group Holdings | Communication Services | Entertainment | Bull | NYSE | Content Creation, entertainment, live events, Long-Term Compounding, merger, Sports Media, Volatility | Login |
| TICKER | COMMENTARY |
|---|---|
| FICO | The top three absolute contributors to the Fund's performance in September were FICO, Oracle and Equifax |
| ORCL | The top three absolute contributors to the Fund's performance in September were FICO, Oracle and Equifax |
| EFX | The top three absolute contributors to the Fund's performance in September were FICO, Oracle and Equifax |
| GOOGL | the top three absolute detractors were Alphabet, Intuit and Adobe |
| INTU | the top three absolute detractors were Alphabet, Intuit and Adobe |
| ADBE | the top three absolute detractors were Alphabet, Intuit and Adobe |
| TROW | T. Rowe Price is the only asset manager held in your Fund. Its shares, however, have not been stellar performers over this four-year+ period, returning just c.30% in USD vs. the MSCI North America's c.120%. Founded back in 1937 by renowned growth investor Thomas Rowe Price Jr., the eponymous T. Rowe Price is now one of the biggest active managers in the US with $1.6tn under management. With costs generally fixed asset management thrives on operating leverage, with T. Rowe no exception, leveraging its scale to deliver at least 30% operating margins every year for three decades. Returns to equity bound between 20-and 30%, and with over $2bn of net cash on the balance sheet, almost all earnings are returned to shareholders via buybacks and a generous 4.5% dividend yield. AUM has trebled over the last 15 years, growing c.9% p.a. driven by market exposure, performance, and net flows. T. Rowe has raised its dividend every single year since listing in 1986 – at a CAGR of 18%. It has one of the industry's highest exposures to pure equities, at c.75% of look through assets, with US equities specifically making up c.50% of the total. Add the remarkably high 4.5% dividend yield, up to a billion dollars of buybacks each year, and it doesn't feel such a stretch to imagine a prospective total shareholder return in the double digits. Since listing in 1986, T. Rowe's shares have returned 16% p.a. in USD, and that's despite the long derating noted above. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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