Nick Train has increased his holding in a FTSE 100 company whose shares have risen by 4,300% over their lifetime.
The purchase shows that Train believes the company still has room to grow. He is adding capital after a substantial share price increase rather than taking profits or reducing the position.
A company with a strong record can continue growing, but a high share price leaves less room for weak results. Any slowdown in earnings, loss of market share or change in expectations could put pressure on the shares.
Train appears willing to accept that risk because he believes the company has lasting strengths. His investment approach focuses on businesses with recognised brands, strong competitive positions and the ability to build value over many years.
He also runs concentrated portfolios. Instead of spreading money across a large number of companies, he holds a smaller group of businesses in meaningful size. This gives successful holdings more influence over returns, but it also increases the effect of setbacks at individual companies.
The latest purchase follows that strategy. Train is backing a company that has already proved its ability to create substantial shareholder value. He is not treating the previous rise as a reason to sell. He is treating the company’s quality and future potential as more important than its past share price performance.
Finsbury Growth & Income Trust Plc (LON:FGT) invests in the shares of predominantly UK-listed companies, with the objective of achieving capital and income growth.
