Star fund manager Nick Train is enjoying a boost to his funds from a strong rally in the shares of his two major football club investments, Manchester United (MANU.K) and Juventus (JUVE.MI).
Citywire AA-rated Train highlighted the performance of the shares of both clubs, as well as his smaller investment in Scottish champions Celtic (CCP), in his latest update to investors.
'Sports and entertainment assets remain in a bull market,' he said. 'That which attracts eyeballs to screens is going up in value.'
That followed share price rallies of 40%, 27% and 22% for Juventus, Manchester United and Celtic in August alone.
Since then the fervour surrounding the shares has cooled a little, but all three remain strong performers since the turn of the year.
Train pointed to e-commerce giant Amazon's (AMZN.O) entry into football broadcasting, snapping up a deal to broadcast 20 Premier League matches from 2019 in June, as one of the contributors to the rally.
‘Live sport is the most valuable of all entertainment content, with the ability to lure the biggest and most predictable audiences, and all three have benefited from the continued reappraisal of the value of such content in a landscape increasingly defined by fragmented digital distribution,’ he told Citywire.
Train holds 1.6% of his Lindsell Train UK Equity fund and Finsbury Growth & Income (FGT) investment trust in Manchester United shares. Juventus is meanwhile a 1.3% holding in the Lindsell Train Global Equity fund he runs with Michael Lindsell and James Bullock, while Celtic is a small position in all three funds.
Manchester United breaks record off the pitch
Manchester United reported a record total revenue of £590 million for the year ending in June, an increase of 1.5% on last year's £581 million, according to results published last week. The US-listed club expects revenue of between £615 million and £630 million in 2019.
Broadcasting revenues increased by £10 million to £204 million and the club signed seven sponsorship deals this year.
The football club's upwards trajectory in revenues contrasts with the its fortunes on the pitch. The club lies 10th in the Premier League table after a sluggish start to the season in which the rift between manager José Mourinho and the club's most expensive player, Paul Pogba, has grabbed the headlines.
Having peaked at more than $26 a share at the end of August, the stock has begun to mirror those performances on the pitch, falling to $22.45.
But the stock remains well up on the price Train paid, of just below $17, a year ago as the manager invested in Manchester United for the second time in his career.
Train first bought shares when the club listed on the London Stock Exchange in the 1990s, making around 30 times his money before selling up in the takeover by the Glazer family in 2005. He later described it as his best ever investment.
Train eyes Ronaldo as commercial catalyst
The performance of shares in Italian champions Juventus has been even more spectacular. July's swoop to buy football superstar Cristiano Ronaldo from Real Madrid had helped to power a 125% rally in the shares in just the last three months.
‘His star profile potentially strengthens Juventus’ overall business, in particular the commercial side of it,’ said Train.
He contrasted Manchester's commercial operations, which account for nearly half of its revenues, with those of Juventus, where they make up less than a third.
‘It is lower in both relative and absolute terms and conveys the unrealised commercial potential of Juventus,’ Train said.
Train is unusual among UK fund managers in his enthusiasm for investing in football clubs. Steve Davies, manager of the Jupiter UK Growth (JUKG) investment trust and open-ended fund of the same name, is the only other major UK fund manager backer of Manchester United. No others invest in Juventus or Celtic.
Over three years, Lindsell Train Global has delivered 95.1% compared to 65.9% from the index.
Lindsell Train UK Equity fund has returned 58.2% over three years, versus 33.7% generated by the FTSE-All Share index.
Over three years Finsbury Growth & Income trust has delivered a total share price return of 56.6% and is currently trading at a premium of 0.4%.