Nick Train adds to Nintendo holdings

Lindsell Train investment trust manager Nick Train has added to his holding in Nintendo, despite having wished he had sold more of the stock years ago.

Train says in the closed-end fund’s final results that despite wishing he had sold more in 2007-08 after it falling 85% from its peak price, he had added in 2012.

He explains: “A period of dull, sideways shuffling is one thing, but falls of this magnitude signal other investors’ concerns that Nintendo’s business is broken or irreparably outmoded.

“And the necessity this has imposed on us – to determine the viability of a given business model – is not and never should be, a standard part of our investment approach. The whole point, for us, is to invest in unusually predictable business types.”

Train says it has added to its holding in Nintendo for three main reasons, including the highly successful launch of its new 3DS handheld console, strong balance sheet and its policy of holding on to games franchises.

He adds: “We think Nintendo is correct to stick to its principles and expect the company to come up with new, innovatory products – like a 3D device that does not require special goggles – that will once again capture customer and investor enthusiasm.”

“Apple stock fell from $11 in 1995 to a low of $3.2 in 1997 (over 70%), during a hiatus in its product development. Over $500 today, its investors were well rewarded for keeping faith in the Apple business model. We hope it will prove right to keep faith with Nintendo too through a similar hiatus.”

At March 31, the investment trust had a 4.6% holding in Nintendo.