Train's media hedge fund

Lindsell Train will launch its Global Media Hedge Fund in October which will be managed by Nick Train.

The fund will be highly concentrated and will average 20 positions, around 15 core long positions and up to five shorts. The turnover in the core long positions is expected to be low, at around 20% pa.

Train said: 'Global media is an area I have gained expertise in and invested in over the years. We believe it offers value as media makes up around 5% of global market capitalisation and has consistently outperformed world indices.'

Train defines media content as anything that attracts anyone to spend time and money in front of a media distribution system.

He added: 'Content is durable, the Beatles and Winnie the Pooh have lasted decades. Low capital intensity and high returns to equity are available and content media will benefit from digital growth.'

According to Train, now is a good time to launch as a decline in share prices creates an attractive entry point for investors.

The number of media distributors is growing which, he believes, is making content more valuable. He said: 'The value of must-watch content is rising. The cost of a 30-second advert in the superbowl has risen from $1.6m in 1999 to $2.3m in 2001.'

Content distributors are likely to be vulnerable to technology shifts, competition and rising cost of content while content owners and developers are likely to be strategic beneficiaries, according to Train.

He said: 'There is no doubt in my mind that the next bull market will be the result of the new economy, specifically broadband, wireless and internet. Content will be low risk participants in this bull market.'

As a consequence, Train aims to establish strategic long positions in media content owners. He said: 'This will be around 20-25 holdings out of a relatively small universe of stocks. The fund will deploy leverage in a semi-permanent, disciplined fashion to enhance returns from media content owners. It will also trade tactical short positions in media distribution companies. There will never be less than 75% invested in media content owners. The minimum position in a holding is 1%.'

The fund will buy into stocks that own copyrights to books, film, music, education, science, legal, tax, accounting, financial data, electronic games, sporting rights, community magazines and newspapers ' anything that entices transactions at a website apart from price, said Train.

The fund will go short of free to air TV and any distributor that needs access to content, such as Yahoo.

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