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Fundsmith

Closed-end funds and OEICs
Backache
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Fundsmith

#392590

Postby Backache » March 5th, 2021, 8:57 am

Annual meeting now on line for those interested.
https://www.fundsmith.co.uk/tv
He discusses possible travails at Sage, his own succession planning ,possibility of downturn in portfolio. A bit more downbeat than some meetings but quite interesting for those who are interested in his vies.

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Re: Fundsmith

#392606

Postby Tigger » March 5th, 2021, 9:34 am

I thought the succession stuff was pretty new (mainly the detail with which it was outlined) and I found it reassuring. And I like the fact he's looking to pass on the firm to staff. Sounds like the managers of Smithson and maybe FEET have impressed Terry Smith with their recent progress.

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Re: Fundsmith

#393076

Postby simoan » March 6th, 2021, 12:38 pm

ReallyVeryFoolish wrote:Essential viewing for anyone interested in Fundsmith. But there's nothing new for those like myself who have watched every one of the annual meeting videos!

RVF

I'd beg to differ sightly. Yes, the initial run through of performance in 2020 and commentary was as per usual, as you'd expect is necessary as part of the formal proceedings of an AGM, and re-iteration of the investment thesis is required for any new holders.

However, I thought the Q&A was much more interesting than usual without the distraction of the crowd - and not only because of the shelf behind Julian Robbins!! In particular, there were some very good points concerning comparison with Baillie Gifford funds and the aim to achieve returns with minimum volatility. IIRC I have seen people on TLF saying because the past 12 months performance of Fundsmith Equity has been relatively poor compared to other funds, they'd switched into Scottish Mortgage. Maybe they now regret that decision given the recent volatility in SMT which is down around 25% in the past month. I believe low volatility and risk-adjusted returns is something that too many private investors completely ignore. IMHO the risk adjusted return and volatility of Fundsmith is second to none.

I thought there were also some interesting comments on inflation and the effect of future digital currencies such as the Yuan on the payment processors such as Visa and PayPal. Not to mention that Sage looks like the next holding on the chopping block. I think it will be gone the next time there is a sell-off and one of their new targets hits their valuation for investment.

IMHO Even if you don't own Fundsmith, it's worth listening to what Terry and Julian have to say once a year.
All the best, Si

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Re: Fundsmith

#417381

Postby simoan » June 4th, 2021, 6:49 pm

As a quick addendum to this discussion, the May factsheet confirmed that they have now completely sold out of Sage. I suspect, reading between the lines, that this process had already been initiated at the time of the AGM.

All the best, Si

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Re: Fundsmith

#417611

Postby Humeau » June 6th, 2021, 8:43 am

I came to the same conclusion as Si whilst watching the AGM video. Terry Smith has had doubts about Sage and I suspect has been selling down for sometime

There is an interesting guy on Twitter called Librarian Capital who posted a blogspot by BronteCapital on June 1st. It talks about the sector and the conclusion, in 2018, was that Sage longer term was the loser to Intuit and Xero.

Librarian Capital invests in moaty companies and his analyses are well worth a read.

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Re: Fundsmith

#418099

Postby simoan » June 8th, 2021, 12:00 pm

You have to remember that Terry Smith is no different to anyone else - he makes mistakes too. I remember him selling out of Proctor & Gamble and when I looked at it I couldn't see too much wrong, so bought some at the same time he sold. For a boring plodder, it's up 75% since then (not including dividends). For me, it's the US equivalent of Unilever.

All the best, Si

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Re: Fundsmith

#418302

Postby flyer61 » June 9th, 2021, 9:11 am

Has TS sold Microsoft? Looking at the top 10 holdings on HL it appears to have disappeared.


Security Weight
NIKE INC 7.06%
PEPSICO INC 6.92%
IDEXX LABORATORIES INC 5.11%
FACEBOOK INC 4.79%
ESTEE LAUDER COMPANIES INC 4.33%
INTUIT INC 4.17%
PAYPAL HLDGS INC 3.90%
RECKITT BENCKISER GROUP 3.90%
L'OREAL 3.77%
STRYKER CORP 3.73%

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Re: Fundsmith

#418307

Postby Tigger » June 9th, 2021, 9:30 am

Hi flyer61,

This is what seems to be in the top ten from the May 2021 factsheet. It still has Microsoft at #2.
https://www.fundsmith.co.uk/fund-factsheet

Top 10 Holdings

Paypal
Microsoft
IDEXX
Facebook
L'Oréal
Estée Lauder
Intuit
Philip Morris
Novo Nordisk
Stryker

I think the HL data comes from Funds Library and it says it is dated 30 Nov 2020. But the factsheet for that month has Microsoft as the #1 holding so I'm guessing there is a data error involved somewhere. The weightings look about right for the top ten holdings but I think the company names attached to each of them may be wrong.

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Re: Fundsmith

#418315

Postby scotia » June 9th, 2021, 10:16 am

flyer61 wrote:Has TS sold Microsoft? Looking at the top 10 holdings on HL it appears to have disappeared.


Security Weight
NIKE INC 7.06%
PEPSICO INC 6.92%
IDEXX LABORATORIES INC 5.11%
FACEBOOK INC 4.79%
ESTEE LAUDER COMPANIES INC 4.33%
INTUIT INC 4.17%
PAYPAL HLDGS INC 3.90%
RECKITT BENCKISER GROUP 3.90%
L'OREAL 3.77%
STRYKER CORP 3.73%


These appear to be the Fundsmith Top Ten from the Hargreaves Lansdown Site (today). Its not clear when these were updated
Edit - apologies - this has already been covered by Tigger.

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Re: Fundsmith

#420846

Postby Humeau » June 20th, 2021, 5:26 am

simoan wrote:You have to remember that Terry Smith is no different to anyone else - he makes mistakes too. I remember him selling out of Proctor & Gamble and when I looked at it I couldn't see too much wrong, so bought some at the same time he sold. For a boring plodder, it's up 75% since then (not including dividends). For me, it's the US equivalent of Unilever.

All the best, Si


It is not necessarily a mistake to sell something to buy something else which looks like it might deliver a higher return. The question is has Fundsmith out paced the 75% return since the sell?

Interestingly enough Fundsmith increased its holding in PG by 121% in Q1. It must be held in the sustainable fund and it was repurchased in Q4, 2020, I believe.

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Re: Fundsmith

#420881

Postby simoan » June 20th, 2021, 11:24 am

Humeau wrote:
simoan wrote:You have to remember that Terry Smith is no different to anyone else - he makes mistakes too. I remember him selling out of Proctor & Gamble and when I looked at it I couldn't see too much wrong, so bought some at the same time he sold. For a boring plodder, it's up 75% since then (not including dividends). For me, it's the US equivalent of Unilever.

All the best, Si


It is not necessarily a mistake to sell something to buy something else which looks like it might deliver a higher return. The question is has Fundsmith out paced the 75% return since the sell?

Perhaps a bit harsh to call it a mistake with hindsight, but I was referring to it being a mistake when he sold it in January 2016. Normally, you can see a valid reason for selling but I don't believe that was the case with P&G and there was some weak reason, like a concern about competition IIRC. Of course, the good news is the Fund itself has overall outperformed P&G since Jan 2016 by ~25% but the Consumer Staples stocks which have continued to be held within the fund e.g. Unilever, PepsiCo, Philip Morris, have not by a long way. The fact he has subsequently bought back in at a higher price for the other fund suggests he has maybe admitted it to himself because P&G is not a substantially different business now to what it was in 2016.

All the best, Si

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Re: Fundsmith

#422304

Postby Humeau » June 25th, 2021, 2:29 pm

Hi Simon,

I would argue that P&G is a substantially better business now than in early 2016 following the activist involvement and the earlier decision to focus on fewer, 65 and more profitable brands, cutting 100 brands and investing more heavily in those left. ROIC TTM, 18.35 compared to 12.9, 5 year average. Net margin 18.61 against 15.62. FCF growth now appears to be strongly positive, rather than negative in the years before that decision was implented.

The big danger now for these consumer goods companies is the relative ease with which new brands can be created using internet marketing, and on that basis refocusing on better brands makes sense, in many, but not all ways.

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Re: Fundsmith

#434097

Postby Backache » August 11th, 2021, 3:06 pm

Semi annual letter to shareholders now up
https://www.fundsmith.co.uk/docs/defaul ... f?sfvrsn=6
I usually find his letters worth reading for an analysis of his holdings and thoughts, must admit I found this was a bit more of a swipe at his critics than anything useful.

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Re: Fundsmith

#434119

Postby monabri » August 11th, 2021, 4:49 pm

Backache wrote:Semi annual letter to shareholders now up
https://www.fundsmith.co.uk/docs/defaul ... f?sfvrsn=6
I usually find his letters worth reading for an analysis of his holdings and thoughts, must admit I found this was a bit more of a swipe at his critics than anything useful.


That's the impression I got from reading the update. There wasn't much 'meat' in there. I also find the list of shares that are up by a few percent/ down by a few percent not very useful - just filling a space.

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Re: Fundsmith

#434300

Postby absolutezero » August 12th, 2021, 11:16 am

Always enjoy reading Terry Smith's stuff.
Good letter. Almost 'stick that in your pipe and smoke it'.

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Re: Fundsmith

#434461

Postby simoan » August 12th, 2021, 11:09 pm

absolutezero wrote:Always enjoy reading Terry Smith's stuff.
Good letter. Almost 'stick that in your pipe and smoke it'.

Well, yes, but I'd prefer that he just ignored these things.It smacks of a significant ego, large shoulders and a whole sack of chips. It's totally unnecessary. Sometimes it is best just to let the results of the investment approach speak for themselves. It's also now getting very boring for long term holders - he's been sounding like a stuck record for several years.

All the best, Si

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Re: Fundsmith

#435174

Postby absolutezero » August 16th, 2021, 4:42 pm

simoan wrote:
absolutezero wrote:Always enjoy reading Terry Smith's stuff.
Good letter. Almost 'stick that in your pipe and smoke it'.

Well, yes, but I'd prefer that he just ignored these things.It smacks of a significant ego, large shoulders and a whole sack of chips. It's totally unnecessary. Sometimes it is best just to let the results of the investment approach speak for themselves. It's also now getting very boring for long term holders - he's been sounding like a stuck record for several years.

All the best, Si

There's not much the guy can say.
He runs a very boring (but successful) fund that has a low turnover! That somewhat limits what he can write about.

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Re: Fundsmith

#435205

Postby simoan » August 16th, 2021, 6:47 pm

absolutezero wrote:
simoan wrote:
absolutezero wrote:Always enjoy reading Terry Smith's stuff.
Good letter. Almost 'stick that in your pipe and smoke it'.

Well, yes, but I'd prefer that he just ignored these things.It smacks of a significant ego, large shoulders and a whole sack of chips. It's totally unnecessary. Sometimes it is best just to let the results of the investment approach speak for themselves. It's also now getting very boring for long term holders - he's been sounding like a stuck record for several years.

All the best, Si

There's not much the guy can say.
He runs a very boring (but successful) fund that has a low turnover! That somewhat limits what he can write about.

That was my point. The Fundsmith motto is "buy good companies and do nothing", or something like that, so there should be nothing worthwhile to say. But still they feel the need to release semi-annual reports and hold an AGM, which as far as I'm aware have no other purpose than to allow Mr. Smith to put the world to rights!! I am not aware that holding an AGM is a requirement for OEICs.

All the best, Si

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Re: Fundsmith

#435208

Postby Aminatidi » August 16th, 2021, 7:10 pm

absolutezero wrote:
simoan wrote:
absolutezero wrote:Always enjoy reading Terry Smith's stuff.
Good letter. Almost 'stick that in your pipe and smoke it'.

Well, yes, but I'd prefer that he just ignored these things.It smacks of a significant ego, large shoulders and a whole sack of chips. It's totally unnecessary. Sometimes it is best just to let the results of the investment approach speak for themselves. It's also now getting very boring for long term holders - he's been sounding like a stuck record for several years.

All the best, Si

There's not much the guy can say.
He runs a very boring (but successful) fund that has a low turnover! That somewhat limits what he can write about.


I'm 2/3rds through his lates book Investing for Growth.

I get the stuck record thing but I find that quite a good way of focusing on what seems to work.

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Re: Fundsmith

#435259

Postby xeny » August 17th, 2021, 6:40 am

simoan wrote:That was my point. The Fundsmith motto is "buy good companies and do nothing", or something like that, so there should be nothing worthwhile to say. But still they feel the need to release semi-annual reports and hold an AGM, which as far as I'm aware have no other purpose than to allow Mr. Smith to put the world to rights!! I am not aware that holding an AGM is a requirement for OEICs.


They've got nothing to say, but need to generate "stuff" for marketing purposes, and for less experienced investors the AGM is surprisingly reassuring as they get to see real people and that other people have invested in this thing.

I've got a friend who watched a couple and it helped move him from never investing to having a small ISA (which he's subsequently done pretty well out of and started to develop a broader interest).


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