One investor I always keep an eye on is Nick Train. The manager of the Lindsell Train UK Equity fund has a brilliant long-term track record when it comes to investing in UK shares. Recently, I discovered that the portfolio manager has been buying a FTSE 100 technology stock for his fund. Here’s a look at the company he has been investing in.
Buying the dip
In the latest factsheet for the Lindsell Train UK Equity fund, Train said he had been buying Experian (LSE: EXPN) shares for his portfolio. It’s one of the world’s largest providers of credit data.
Experian shares have come down in price in recent months on the back of the banking crisis in the US. This is due to the fact that the crisis has created some uncertainty in relation to the level of demand for the company’s services in the near term.
As Train points out, there is correlation between banks’ use of Experian’s services and their ability to extend credit – which would be compromised if problems in the banking sector get worse.
However, the fund manager believes the share price weakness here is temporary. So he has been taking advantage of it and adding to his position in the FTSE 100 stock (he first invested in Experian in 2020).
Economic history is littered with brief panics associated with bank runs, most of which are localised and soon forgotten. We hope this is a similar episode and have been adding to Experian through this temporary share price weakness.
Nick Train
As a result of his recent buying activity, Experian was the fifth-largest holding in his UK equity fund at the end of March, with a weighting of 9.06%.
Why he’s bullish
In the monthly factsheet, Train briefly discusses why he’s bullish on Experian.
One reason is that, as the biggest credit bureau in the world, it’s a play on long-term global growth.
Another is that Experian has compounded its earnings at nearly 9% per annum since 2007. The fund manager hopes to see similar growth over the next 16 years and beyond.
Train also points out that when Experian last reported in January, it reaffirmed its expectation for 8-10% revenue growth for the year ended 31 March.
That’s ahead of the average revenue growth it has delivered since it came to the UK stock market in 2006 (roughly 6% a year). In other words, top-line growth here appears to be picking up.
Worth buying today?
Is the stock worth buying today, given Train’s bullish stance? I think so.
This is a high-quality FTSE 100 company that has strong competitive advantages and plenty of growth potential.
And right now, its price-to-earnings (P/E) ratio is in the low 20s. I see that as an attraction valuation.
Of course, the American banking crisis does add some uncertainty, as Experian is the largest credit bureau in the US.
However, like Train, I expect the problems in the US, and the share price weakness here, to be temporary.
So I think there’s an opportunity for investors today.
