Investor wrote:Received Stephen Yiu's Blue Whale Capital newsletter this morning and he states that he sold out of both Meta and PayPal in January, before they plummeted in value:
"Both PayPal and Meta had been holdings in the portfolio since inception in September 2017. However, in light of recent news relating to acquisitions and increased competition in the sector, we sold out of PayPal in January, prior to the c.25% share slump following the release of their Q4 2021 earnings at the start of February. We sold Meta because of the perceived deterioration of its business quality (ROIC profile) on its significant, yet questionable, investment in the metaverse. Again, this sale was transacted prior to the c.$250bn drop in market cap following its latest earnings update."
These two companies have continued to be held by FundSmith.
I very much understand the philosophy Terry Smith's "do nothing" strategy, but I sure wish he had exited from PayPal and Meta like Stephen Yiu had.
Hopefully they will eventually bounce back.
But it's been a very painful few weeks for FundSmith holders and the future is looking uncertain.
A few weeks or months of underperformance here or there is nothing really, is it? I personally don't like the quotes from the newsletter, which you have to remember is marketing material - they want to appear clever so you invest more because that's how they get paid. If they are claiming some kind of market timing ability then it is even worse because we all know that is not possible, and such buy or sell results are a combination of foresight and good fortune. They should always recognise the good fortune with respect to the timing but I see no sign of that from the quote you posted. Hopefully, next time they buy something the day before it issues a profit warning or sell something the day before a killer 50% premium is offered for the company, they'll be only too happy to put it in their newsletter.