Podcast Summary

Podcast: The Master Investor Podcast with Wilfred Frost
Episode: Under-Owned, Undervalued, Unapologetic: Nick Train’s Case for UK Equities
Date: December 18, 2025
Guest: Nick Train, Founder of Lindsell Train, Manager of Finsbury Growth and Income Trust

Episode Overview

This episode of The Master Investor Podcast features a deep-dive conversation between host Wilfred Frost and renowned fund manager Nick Train, whose career in UK equities spans over 25 years. The discussion centers on Train's long-term, concentrated investment philosophy, the overlooked value in UK equities, and specific holdings within the Finsbury Growth and Income Trust—particularly those positioned to benefit from structural industry trends like artificial intelligence (AI). The conversation also touches on performance headwinds, patience, optimism in investing, and Train’s influences from legendary investors like Warren Buffett and Charlie Munger.

Key Discussion Points & Insights

1. Nick Train’s Investment Philosophy

• Patient, Long-Term Outlook:
  • Emphasizes holding quality businesses for decades.
  • “Our annual portfolio turnover, voluntary turnover over the last quarter of a century has averaged something less than 5% per annum, which even in the context of other patient investors really is quite strategic.” (05:03, Nick Train)
• Concentration Over Diversification:
  • Prefers 20-30 holdings, often with top holdings making up over 80% of the portfolio.
  • Inspired by Buffett and Munger: “All you need are eight world class businesses to make up a portfolio and then you just sit and wait and good things will tend to happen to you.” (17:42, Nick Train)

2. The UK Market: Under-Owned, Undervalued, and Unappreciated

• Underperformance & Perception:
  • UK has lagged US for 10-20 years due to less exposure to structural growth sectors.
  • However, years of disfavor have resulted in London-listed world-class enterprises being under-owned and undervalued.
  • “It’s resulted in those London listed companies that are evidently world class enterprises… being under owned and undervalued.” (08:14, Nick Train)
• Potential AI-Driven Re-Rating:
  • AI is a new catalyst; UK companies with proprietary data stand to benefit.
  • “We can find companies listed on the London stock market that appear to offer an access to the wealth that's likely to be created by artificial intelligence.” (08:56, Nick Train)

3. AI and Proprietary Data: The LSEG and RELX Cases

• AI Disruption Framework (via LSEG CEO David Schwimmer):
  • Three critical factors: compute power, competing AI agents, and proprietary data.
  • “Owners of proprietary data... are in a strategically advantaged position to kind of sell their data to the highest bidder.” (12:22, Nick Train)
• London Stock Exchange Group (LSEG):
  • Global data franchise, deals with OpenAI and Anthropic, and listed at lower multiples than US peers.
  • “For a digital business with low capital intensity and a significant growth opportunity, the starting multiple doesn't matter that much.” (13:55, Nick Train)
• RELX:
  • Transitioned from analog to digital analytics and AI-powered services.
  • Its risk division now comprises over half of RELX’s value (up from 2% two decades ago) with expanding market opportunities.
  • “Capital light digital businesses with a clear and substantive TAM ahead of them… can stay rewarding for much, much longer than maybe British investors have understood.” (20:26, Nick Train)

4. Enduring Value of Iconic Brands: Diageo Example

• Wealth Creation via Brands:
  • Even with short-term share price weakness, Diageo’s premium brands are likely to grow as global wealth increases.
  • “Johnnie Walker, Guinness, Don Julio Moennessy, those brands will be being consumed in 25 years time.” (26:36, Nick Train)
  • Reflects Bernard Arnault's comment: luxury brands will outlast even the most advanced technology.

5. On Underperformance & Investor Patience

• Recent Performance Headwinds:
  • Underperformance in recent years due to value rally; top positions (LSEG, Diageo) declined year-to-date.
  • “We've missed a value rally in a value market. And Finsbury's portfolio is deliberately heavily biased towards growth businesses…” (28:02, Nick Train)
• Nick’s Response:
  • Increases personal stake when portfolio underperforms, emphasizing belief in long-term value.

6. Philosophy of Holding and Mistakes

• Don’t “Fidget” with Winners:
  • “Every sale is a confession of error.” (29:50, Nick Train quoting Thomas Phelps)
  • Holds through rough periods: “The best thing you can do is to hunker down and own [companies] through inevitable periods of more difficult trading performance or investors attention being directed elsewhere.” (30:23, Nick Train)
• When to Sell?:
  • Only when structural franchise is broken or thesis no longer holds.

7. Navigating Benchmarks & Investor Pressure

• Long-Term vs. Short-Term Focus:
  • Accepts need to benchmark (FTSE All Share), but focuses on businesses, not index composition.
  • “I'm much, much, much more focused on individual businesses. But absolutely, you know, I look every three months at how we are doing relative to that benchmark.” (34:41, Nick Train)
• Investor Demands:
  • Recognizes shrinking investment time horizons add pressure, but refuses to deviate from core discipline.

8. Personal Mindset & Advice

• Commitment to Optimism:
  • “I have trained myself to be an optimist and to regard a setback like this year has been a setback as a buying opportunity.” (37:24, Nick Train)
• Enduring Mantra:
  • “Be bold, be disciplined, be optimistic… the principles underpinning that portfolio are the same as they were 10 years ago or 20 years ago.” (38:08, Nick Train)

Notable Quotes & Memorable Moments

• On AI and UK Stocks:

  • “Perhaps that's not a perspective on those businesses that's widely recognized. So maybe that's the thing that most thrills me about the opportunity that I think we're capturing in our portfolio.” (09:03, Nick Train)

• On Portfolio Construction:

  • “Munger's observation that all you need are eight world class businesses to make up a portfolio and then you just sit and wait and good things will tend to happen to you. You know, that's been a pretty good account of what we've attempted to do.” (17:42, Nick Train)

• On Enduring Brands:

  • “On a 50 year view he had no idea whether the iPhone was going to remain as relevant a product as it is today. On the other hand, Arnault said, I have no doubt that Dom Perignon will still be being consumed and aspired to being consumed in 50 years time.” (24:08, Nick Train, quoting Bernard Arnault)

• On Learning from Underperformance:

  • “We believe that you can identify companies with structural franchises or brands that will endure and prosper and the best thing you can do is to hunker down and own them through inevitable periods of more difficult trading performance or investors attention being directed elsewhere…” (30:22, Nick Train)

• On Optimism:

  • “I took a conscious decision to be constantly optimistic… pessimism as a trait was associated with failure in the investment industry.” (36:39, Nick Train)

Timestamps for Key Segments

• Investment Philosophy & Trust Background: 03:13 – 05:50
• US vs. UK Market Dynamics: 06:47 – 08:14
• UK Disfavored Status & AI Angle: 08:14 – 10:34
• AI: LSEG and the Data Advantage: 10:34 – 13:55
• ETF Investing vs. Stock Picking & Portfolio Concentration: 15:47 – 18:17
• RELX Case Study: 19:02 – 21:38
• Diageo: Brand Durability: 22:10 – 27:07
• Recent Performance Challenges: 27:18 – 29:16
• Selling and Mistakes: 29:50 – 32:35
• Benchmarks and Investor Patience: 32:35 – 36:10
• Mindset & Parting Advice: 36:39 – 38:43

Takeaways

• Concentration and Patience: Nick Train’s approach is a testament to the power of few, high-quality holdings held for the very long term.
• UK’s Hidden Assets: Despite underperformance, select UK companies possess global, AI-era advantages, particularly those with proprietary data.
• Mindset Matters: Optimism, boldness, and discipline are essential, even—perhaps especially—through rough periods.
• Not All Indexes Are Equal: Passive investment can work, but Train makes a powerful case for actively seeking rare compounders in unloved markets.

Closing Mantra:
“Be bold, be disciplined, be optimistic.” (38:08, Nick Train)

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