Imperial Brands

[Topidiotboy]

I note the following from Fundsmith's Monthly Report : "During the month we exited our holding in Imperial Brands."

Terry Smith is not infallible, but in my experience ignoring what he does is rarely a wise move.

IMB is 5.5% of my portfolio and I was planning to add at the current SP, but this event has caused me to rethink that plan.

I'm not going to follow blindly and sell, but last Novembers results report has been downloaded, and some further analysis with a far more skeptical eye is in short order. Would be interesting to get the views of others?

[simoan]

I note the following from Fundsmith's Monthly Report : "During the month we exited our holding in Imperial Brands."

Terry Smith is not infallible, but in my experience ignoring what he does is rarely a wise move.

IMB is 5.5% of my portfolio and I was planning to add at the current SP, but this event has caused me to rethink that plan.

Yes, I saw this also. It's quite a marked change in his approach to tobacco stocks although Fundsmith still holds Philip Morris. I didn't notice any of the obvious financial metrics Terry Smith holds dear (ROCE, Op Mgn, FCF, Cash conversion) move that much in last months FY results that would lead to him to dump his whole position, but it's a concern to me as I also hold some IMB for income.

I'm guessing it's probably nothing in the last results announcement itself, but likely more to do with the change in the political climate and legislation in the US, to which IMB now has a deeper exposure. See https://www.usatoday.com/story/money/na ... 901625001/

All the best, Si

[tjh290633]

As long as they continue to pay dividends at, at least, the present level I see no point in selling IMB. Even if they fail to keep up their 10% per year increases in dividends, they are still worth keeping.

At a yield of 5.6%, it's a case of "If you can find a better 'ole, go to it". And if JT do make a bid, then we will have to.

TJH

[ReformedCharacter]

As long as they continue to pay dividends at, at least, the present level I see no point in selling IMB. Even if they fail to keep up their 10% per year increases in dividends, they are still worth keeping.

At a yield of 5.6%, it's a case of "If you can find a better 'ole, go to it". And if JT do make a bid, then we will have to.

TJH

If they rose to the top of your top up table, would you buy more?

FWIW I don't hold any but at the current price and yield with the possibility of a takeover at some point, I'm tempted as I think they're probably good value.

RC

[Topidiotboy]

Si, I think you are spot on. This is a bet on which way the wind is blowing with regards to big tobacco in the US, and probably the developed world as a whole. Philip Morris is a pure emerging markets play, so I think that explains why it will continue to remain a top ten holding.
It has long been the case that big tobacco has managed decline profitably, but perhaps the view is that an inflexion point has been reached.
I think it will be interesting to hear Terry Smiths views on this at the next AGM. I wont be increasing my exposure, and I cant bring myself to sell either because the fundamentals scream value. This is another one that falls into the hold and watch developments carefully basket for me.

[tjh290633]

As long as they continue to pay dividends at, at least, the present level I see no point in selling IMB. Even if they fail to keep up their 10% per year increases in dividends, they are still worth keeping.

At a yield of 5.6%, it's a case of "If you can find a better 'ole, go to it". And if JT do make a bid, then we will have to.

TJH

If they rose to the top of your top up table, would you buy more?

FWIW I don't hold any but at the current price and yield with the possibility of a takeover at some point, I'm tempted as I think they're probably good value.

RC

Strange, I composed a reply then got a message saying that I had to be logged in to quote, which I did, and it then posted without my reply.

Yes, I would buy more, provided that they were not disqualified. I disqualify holdings if, after topping up, they contribute more than 5% of the total dividend income or absorb more than 5% of the total portfolio cost. At the moment, IMB is eligible for topping up.

TJH

[Dod101]

When a successful fund manager exits what seems a like good share it is always helpful to know why. The trouble is that their aims are often not the same as mine. I have an 'income' mindset when it comes to a share like Imperial Brands and it may be that Smith is more into total return. Imps may be ex growth but at least for the time being the dividend seems secure and as recently as the announcement of their results to September were recently announced they confirmed their 10% increase in the dividend. At that timer they must have known the short term risk in P & H for instance.

So long as the dividend is secure (let alone increasing by 10% per annum) I am content and it does not currently look in danger. The market often knows best though.

Dod

[simoan]

This isn't the HYP board and the yield has nothing whatsoever to do with the investing approach of Terry Smith being discussed. There are reasons to hold IMB shares other than the dividend, in particular as a defensive share with very good cash conversion and cashflow yield. The dividend is a bonus that comes as a direct result of the latter. He might have sold his entire holding but the one thing we know for certain, is that it has nothing to do with the dividend. However, the reason he sold could ultimately lead to problems with it in future.

All the best, Si

[Dod101]

This isn't the HYP board and the yield has nothing whatsoever to do with the investing approach of Terry Smith being discussed. He might have sold his entire holding but the one thing we know for certain, is that it has nothing to do with the dividend. However, the reason he sold could ultimately lead to problems with it in future.

So go on then, don't keep me in suspense. Why did he sell?

Dod

[Raptor]

This isn't the HYP board and the yield has nothing whatsoever to do with the investing approach of Terry Smith being discussed. There are reasons to hold IMB shares other than the dividend, in particular as a defensive share with very good cash conversion and cashflow yield. The dividend is a bonus that comes as a direct result of the latter. He might have sold his entire holding but the one thing we know for certain, is that it has nothing to do with the dividend. However, the reason he sold could ultimately lead to problems with it in future.

All the best, Si

So how do we know he did not sell because of the dividend? Again wonder what prompted the sell, would be nice to understand why.

Raptor.

[simoan]

So how do we know he did not sell because of the dividend? Again wonder what prompted the sell, would be nice to understand why.Raptor.

I haven't got time to explain his investment approach - Google "Terry Smith" or go here: http://www.fundsmith.co.uk to learn more, if you are interested.

If people want to discuss the IMB divdend as part of a HYP strategy there's a board for that. I'm not sure why the High Yield dogma has to effect every other share discussion board.

All the best, Si

[Raptor]

So how do we know he did not sell because of the dividend? Again wonder what prompted the sell, would be nice to understand why.Raptor.

I haven't got time to explain his investment approach - Google "Terry Smith" or go here: http://www.fundsmith.co.uk to learn more, if you are interested.

If people want to discuss the IMB divdend as part of a HYP strategy there's a board for that. I'm not sure why the High Yield dogma has to effect every other share discussion board.

All the best, Si

As far as I am aware the board administrators have not said that dividends could not be discussed on any of the investment boards. -DELETED-

Raptor.

Moderator Message:
On this area of TLF you can discuss any investment approach that is legal. Please do not attack individuals. regards, dspp

[Dod101]

I think we can all understand Terry Smith's investment approach but it does not explain why he sold Imperial Brands. I am inclined to think that he sees it as ex growth and I would not disagree with that.

However, not to attack anyone, I am intrigued that simoan can be so categoric that it has nothing to do with the dividend and yet is unable/unwilling to speculate on what it might be that bothers Smith. As I said earlier, it is often the case that the aim of a fund manager does not coincide with my own and so to take fright because a successful fund manager sells is not necessarily a sensible thing to do.

As far as I can see the dividend should be secure and as that is my primary interest I am not too concerned.

Dod

[simoan]

I think we can all understand Terry Smith's investment approach

Well, it's pretty clear that's not the case. We wouldn't be talking about dividends at all if that were the case!

I am intrigued that simoan can be so categoric that it has nothing to do with the dividend and yet is unable/unwilling to speculate on what it might be that bothers Smith. As I said earlier, it is often the case that the aim of a fund manager does not coincide with my own and so to take fright because a successful fund manager sells is not necessarily a sensible thing to do.

What do you mean "unwilling to speculate"? Have you not read my initial reply on this thread? Sometimes Fundsmith sell a position because of wider political concerns which are nothing to do with the current fundamentals of a share. An example was the sale of Swedish Match a few years ago which I believe was down to the Obama administrations thawing of trade relations with Cuba IIRC.

All the best, Si