Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

GVQ's Seaton throws down the gauntlet to Nick Train

GVQ's Seaton throws down the gauntlet to Nick Train

Jamie Seaton, manager of the £323.3 million GVQ UK Focus fund, has taken the unusual step of lining up his fund against Citywire AAA-rated Nick Train's £5 billion Lindsell Train UK Equity fund in his regular update to investors.

Writing in his April update to investors, Seaton said returns from his fund had been 'lumpy' since the Brexit vote, but showed the fund level-pegging with Lindsell Train UK Equity since the referendum to emphasise the strong total return over the period.

He said his fund had faced 'obvious headwinds' since the Brexit vote given the rally in commodity stocks and banks, where the fund had zero exposure.

Despite this, the fund had delivered returns roughly in line with the FTSE All-Share, 'albeit the fund's performance has been driven in a very different way, with mergers and acquisitions a strong contributor'.

Seaton's top holding is Shire (SHP), the subject of a bid from Japanese pharmaceutical giant Takeda (4502.T).

The manager said he had included the 'ever popular' Lindsell Train UK Equity fund's returns 'not for comparison, but more for further context'.

But he was drawn into a comparison with star manager Train's fund when outlining the outlook for his portfolio.

Seaton said his fund's growth profile 'continues to look solid', with historical earnings growth of 18.6% from the portfolio, long-term projected earnings growth of 9.3% and a price to prospective earnings ratio of 12.6 times.

He compared that to Nick Train's fund, 'a number of whose constituents we believe have become a very crowded trade in funds', citing consumer staples stocks like Unilever (ULVR).

He said Lindsell Train UK Equity's stock's historical earnings growth stood at 11.2%, while projected earnings growth was higher than his fund's at 12.1%, although the stocks were more expensive, at 20.9 times prospective earnings.

While that implies the market believes the future for Nick Train's stocks will be better than the past, the opposite is the case for Seaton's.

'If the market consensus growth numbers, however, prove to be overly pessimistic, there is clearly additional (and substantial) further upside,' said Seaton.

'We also believe the lower starting multiple offers relative downside protection through lesser multiple compression.'

Seaton reserved a final jab at Nick Train's focus on more expensive stocks, referring to the market cycle chart he keeps on his desk.

'Of interest to me, and more on the right hand side of the chart of the cycle than the left, these words: 'Optimistic, long duration projections. Revised models justify stretching. Unilever is a great company isn't it? It had better be.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Jamie Seaton
Jamie Seaton
129/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 7.24%
Nick Train
Nick Train
2/475 in Equity - Global (Performance over 3 years) Average Total Return: 79.21%
Citywire TV
Play Tim Steer: fund managers will have to get 'stuck in'

Tim Steer: fund managers will have to get 'stuck in'

The second part of our film with former Artemis and New Star fund manager Tim Steer looks at how his profession has evolved over the past two decades.

2 Comments Play Tim Steer: how to spot a stock disaster coming

Tim Steer: how to spot a stock disaster coming

The former Citywire AAA-rated fund manager has written a book on 22 stock disasters and how forensic examination of annual reports could have spotted them coming.

Play CEO tapes: the gap between best and worst alternatives is stark

CEO tapes: the gap between best and worst alternatives is stark

In the final part of our series we take a look at the rise of illiquid investing and whether it really serves in clients best interests.

Read More
Your Business: Cover Star Club

Profile: why the world of wealth is fracturing

Profile: why the world of wealth is fracturing

The problem with wealth management, according to Robert Paul, London & Capital’s youngest ever partner, is that it is very antiquated.

Wealth Manager on Twitter