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Nick Train doubles Hargreaves Lansdown stake with £374m buy

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Nick Train doubles Hargreaves Lansdown stake with £374m buy

Citywire AA-rated Nick Train has near-doubled his stake in Hargreaves Lansdown to more than 10%, sinking around £374 million into the stock to become the largest external shareholder.

The company was already the fourth largest holding in the Lindsell Train UK Equity fund ahead of the purchase, which, as a percentage of market cap, took its position from just over 5% to 10.1%. Train leapfrogged BlackRock and Baillie Gifford to become the biggest holder after founders Peter Hargreaves and Stephen Lansdown.    

A spokesperson for Lindsell Train had not responded to a request for comment at time of publication.

At a current share price of £17.27, the £5.4 billion fund’s stake in HL is valued at £784 million.

Shares in Hargreaves have tumbled more than a fifth from a record high of £22.62 last autumn, although even after that rerating it remains priced at an aggressive growth premium of 33.5 times last year’s earnings, versus an investment management and fund peer average of 12.

The group dropped 7% in a single morning of trading last October after it warned that equity volatility was driving an ‘industry wide slowdown’ in net retail flows.

In a trading update, the firm warned that an uncertain market environment and weak investor sentiment had caused net retail flows to be hit across the industry during the past three months.

Hargreaves Lansdown reported net new business of £1.3 billion in the third quarter of this year, down 13% on the £1.5 billion it accumulated in the same period a year ago.

Hargreaves Lansdown chief executive Chris Hill (pictured) said: ‘The past quarter has seen an uncertain market environment and weak investor sentiment’.

Train is a long-term backer of Hargreaves Lansdown. His conviction puts him at odds with City consensus, which in recent months has fallen to the most bearish point seen in many years, with Barclays the sole house holding it on a buy, on a £20.14 target versus the median £17.05.  

Writing in his regular fund update in June last year, Train noted that alongside Burberry, Fidessa, the LSE and Daily Mail, Hargreaves Lansdown had been one of his strongest holdings over six months.

‘All of these we have seen characterised as “expensive” in recent times,’ he said. ‘Hargreaves with its long standing P/E in the high 20s has outraged value investors for many years.

'But the fact is it is the success of the strategies of these companies – strategies with technology at the heart of them – that has mattered much more to stock market investors than the valuations.’   

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Nick Train
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5/166 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 41.55%
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