Interactive Investor

Nick Train: UK market is ‘pregnant’ with value and opportunity

Train says the types of companies he invests in haven’t been in favour during the recent market rally that led the FTSE 100 to a new record high, but remains optimistic about valuation opportunities.

22nd May 2024 10:23

by Kyle Caldwell from interactive investor

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Star investor Nick Train missed out on a boost from the UK stock market’s recent rally, but remains confident about value opportunities he’s seeing.

As we recently reported, since the end of October the UK equity market has experienced a period of strong performance, with the FTSE 100 hitting a record high in early May.

Overall, from 27 October 2023 to 30 April 2024, the FTSE 100 index is up 13.9% in total return terms, according to data from SharePad. However, on average, fund investors fared better, with an average return of 16.2% for the Investment Association (IA) UK All Companies sector, according to data from FE Analytics.

Nick Train, however, has lagged this rally. The WS Lindsell Train UK Equity is up 6.8%, while Finsbury Growth & Income (LSE:FGT) has gained 5.8%. WS Lindsell Train UK Equity one of interactive investors Super 60 investment ideas

Commenting on performance for the month of April, Train says the types of companies he invests in havent been in favour.

Firms Train favours typically have big brands, intellectual property and captive customers due to providing essential products or services. These companies are classed as high-quality growth stocks, and typically have higher price tags in terms of valuations.

In addition, there are certain sectors of the market Train doesnt invest in, such as oil and mining companies.

Train said: “Sometimes a portfolio just ‘clicks’ and gains are effortless. At other times it seems that all the breaks are running against you. Sadly, the latter is the case with your company’s portfolio currently. Putting it simplistically: we do not own oil and mining shares and they have been going up. We own meaningful positions in premium and luxury consumer brand owners, Burberry (LSE:BRBY) and Diageo (LSE:DGE), and they have been going down.”

However, Train remains optimistic about valuation opportunities. “We continue to believe the long period of underperformance from the UK stock market has thrown up opportunities that we are keen to capture,” said Train.

In addition, he said the recent multi-million-pound bids for Anglo American (LSE:AAL) and Darktrace (LSE:DARK) “reinforce our sense that the UK market is pregnant with value and opportunity”.

Train added: “We do not own Anglo or Darktrace and we don’t want any of our companies to be bid for at current valuations, but we do hope and expect your portfolio will participate in any improved confidence about London-listed equities.”

Allianz Technology Trust (LSE:ATT) is one of the beneficiaries of Darktrace’s share price leaping in late April after the cybersecurity firm accepted a takeover bid from a US private equity firm. In an interview with interactive investor, Allianz fund manager Mike Seidenberg said that he bought Darktrace earlier this year.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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