Nick Train: The Richard Hunter Interview Podcast

TL;DR

Nick Train discusses the undervalued UK stock market and the abundance of opportunities it presents, particularly in digital-enabled companies and luxury brands.

Transcript

hello and welcome to the richard hunter interview as ever this is a place where i'll be discussing matters of interest with a whole range of investment experts in this episode i'm pleased to be joined by our first and most popular guest ever on the richard hunter interviews who has kindly agreed to speak with us again nick train co-founded lincoln ... Read More

Key Insights

• 🫰 The UK stock market is currently undervalued compared to global indices, offering investment opportunities in digital-enabled companies and luxury brands.
• 🍝 The UK market has underperformed the US market over the past 20 years, but Train believes this presents an opportunity for growth and catching up.
• 👨‍💼 Digital technology is becoming increasingly pervasive and profitable, creating wealth but also disrupting traditional business models.
• 💪 The performance of Train's portfolio in 2021 was not as strong as the benchmark, but the business performance of the companies exceeded expectations.
• 💝 Train believes in consistency and a distinctive investment approach, resisting the temptation to jump on the latest investment bandwagon.
• 🥹 Despite short-term challenges, Train holds a positive outlook for the future of the UK market and the potential for growth in digital and luxury sectors.
• 🍉 Train highlights the value of long-term investment and the importance of considering a company's past performance and potential for future growth.

Questions & Answers

Q: Why does Nick Train believe the UK market is undervalued?

Train states that the underperformance of the UK stock market compared to global indices is one reason. He also believes that there are now more opportunities with companies that previously seemed overpriced but are now cheaper due to UK's neglect by global investors. Additionally, the changing composition of the market, with the inclusion of more digitally enabled companies, offers more growth potential.

Q: How pervasive and profitable does Train consider digital technology to be?

Train believes that digital technology is becoming increasingly pervasive and profitable, emphasizing that every company is moving towards becoming an internet company. He cites examples like Unilever, which has seen 12% of its revenues come from online channels and expects this number to grow. Train acknowledges that digital technology has both created wealth and caused disruption to 20th-century business models.

Q: How did Train's portfolio perform during the pandemic?

Train states that while the portfolio's performance in 2021 was up 13%, it was poorer than the benchmark, which was up 18%. However, he emphasizes that the business performance of the companies in the portfolio exceeded expectations, even for shares that didn't perform well. He mentions the London Stock Exchange as an example, which he believes had strong business performance despite its share price decline.

Q: Has Train ever been tempted to abandon his investment philosophy and jump on the latest investment bandwagon?

Train firmly states that he has never been tempted to abandon his investment philosophy. He believes that consistency and a distinctive investment approach provide value to investors, rather than constantly changing strategies. Train emphasizes the importance of remaining consistent and avoiding radical changes to the portfolio to meet clients' expectations.

Summary & Key Takeaways

• Nick Train believes that the UK stock market is currently undervalued compared to its global peers, offering cheap exposure to mega trends and numerous investment opportunities.

• Train highlights the underperformance of the UK market over the past 20 years compared to the S&P 500 and Nasdaq, emphasizing the need for the UK to catch up.

• He attributes the increased opportunities to a higher number of UK companies fitting into their investment strategy, as well as the growth of new digital-related companies entering the market.