Nick Train: Market isn’t cheap – but isn’t expensive either

Lindsell Train fund manager Nick Train admits that the market is not cheap but rejects claims that it has grown too expensive.

Train, who manages the £449m Finsbury Growth & Income trust for Frostrow Capital, says: “I would not accept that valuations of exceptional companies have become excessive or overstretched in the past six months.”

However, the manager does concede not many companies appear cheap and says non-UK names may warrant a second look.

Train says: “We do not have an excessive reserve list of stocks.

“There are also a couple of possible ideas which are non-UK companies. We are closer maybe to allocating capital to some of them. There are a few things, but not a multitude.”

In recent months, Train has been adding to two of his positions that posted losses and dragged on performance – Unilever and Pearson.

Train says: “Unilever are down 15 per cent from their all-time high. But periods of underperformance from this stock are not unheard of and crucially those periods had had little or no relevance on the long term upwards march of share price.

“Pearson saw share prices fall by 8 per cent in one day. That was because the company announced profit margins were going to be less than expected, due to investment in software and digitalisation.

“As soon as shareholders recognise that this will pay off then the share price pay-off will be thrilling.”