Fundsmith - Terry Smith commentary.

[nmdhqbc]

I like James Acaster but I don't get the connection.

I thought I gave the page number. Page 6. "his or her", "he or she"
That's the bit in the stand up. No big deal. Just made me think back and chuckle a touch.

[bluedonkey]

Understood.

I bought Fundsmith in July 2018. The most it's been down since I bought is 5%. Pretty good in light of the turmoil since then.

[Dod101]

Thanks Bachache. Not much we did not already know and not as good as Buffett in his heyday but a decent read nevertheless. I do not hold Fundsmith.

Dod

[OhNoNotimAgain]

His rule about not overpaying seems at odds with the data on this page

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

[scotia]

His rule about not overpaying seems at odds with the data on this page

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

Presumably the statistics in the above link relate to current prices - and not the price originally paid. Since he is a long term holder this difference is significant. If we assume that he did not overpay, the statistics simply show that his investments have been very successful.

[simoan]

I actually find these missives from his highness pretty boring these days. He makes some valid bull points for his investment in Facebook but doesn't make any bear points e.g. increasing regulation of social media worldwide, clampdown on tax evasion etc. You have to remember he's a great salesman and the letter is really just a sales brochure by another name. Once you see through this, you wonder what the point is. As Dod says, it's no fun at all to read, just boring banging of the drum each year, quite unlike the fun packed read of the Warren and Charlie show in the Berkshire letters.

Al the best, Si

[Backache]

His rule about not overpaying seems at odds with the data on this page

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

Presumably the statistics in the above link relate to current prices - and not the price originally paid. Since he is a long term holder this difference is significant. If we assume that he did not overpay, the statistics simply show that his investments have been very successful.

It's an open ended fund which is increasingly popular so I think it reflects the price he is paying as well as what he has historically paid.
Having said that he does explain (at boring length for some) why he thinks these companies represent good buys at the price and that they are not now any more expensive compared with the rest of the market than at other times when he has bought them.

[OhNoNotimAgain]

His rule about not overpaying seems at odds with the data on this page

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

Presumably the statistics in the above link relate to current prices - and not the price originally paid. Since he is a long term holder this difference is significant. If we assume that he did not overpay, the statistics simply show that his investments have been very successful.

It's an open ended fund which is increasingly popular so I think it reflects the price he is paying as well as what he has historically paid.
Having said that he does explain (at boring length for some) why he thinks these companies represent good buys at the price and that they are not now any more expensive compared with the rest of the market than at other times when he has bought them.

The problem with buying and holding highly rated companies is that the upside is limited, but the downside is bigger.

If earnings beat expectations the market says, yes well we expected that so the shares don't get rerated. If earnings fail to meet expectations the market cuts earnings' forecasts and cuts the rating so you get a double whammy on the downside.

[bluedonkey]

High earnings growth at a constant P/E equals high share price growth.

[ADrunkenMarcus]

High earnings growth at a constant P/E equals high share price growth.

And even strong earnings per share growth and a moderately declining P/E can lead to good share price growth.

Best wishes

Mark.

[Backache]

The problem with buying and holding highly rated companies is that the upside is limited, but the downside is bigger.

If earnings beat expectations the market says, yes well we expected that so the shares don't get rerated. If earnings fail to meet expectations the market cuts earnings' forecasts and cuts the rating so you get a double whammy on the downside.

The downside of all shares is usually 0 , given that the companies that he buys are generally financially strong with very good cash coverage of interest this particular downside would appear less likely.
Smith also has devoted quite a bit of time in his various presentations explaining why companies whose earnings grow at faster rates have better long term upsides even if they are down rated.
Having said that this can only be achieved by superior analysis and whereas his results have been good to date I agree that experience suggests this often does not persist for fund managers.

[Dod101]

I have no argument with Fundsmith, although I do not hold. I see no reason why it should not be a safe haven indefinitely. My comment was solely aimed at his shareholders' letter which does not tell us very much and is much less informative than Buffett in the old days, and in fact Nick Train at the moment. For instance there seems to be no grand vision nor detailed discussion, even about Unilever which he mentions but never gets into real detail about.

He will presumably produce something similar for Smithson in due course, where I do have a modest holding.

Dod

[simoan]

I have no argument with Fundsmith, although I do not hold. I see no reason why it should not be a safe haven indefinitely. My comment was solely aimed at his shareholders' letter which does not tell us very much and is much less informative than Buffett in the old days, and in fact Nick Train at the moment.

The trouble is, this is by design. The Fundsmith "investible universe" is so small and the investment approach ("Buy good companies and then do nothing") so rigid that there really is very little to say, and hence little point to the shareholder letter other than as a sales brochure. The same goes for the AGM - how many other OEICs have an AGM? So what is the purpose of it other than as "The Terry Smith Show"? Don't get me wrong, I've been a happy investor since 2012, I believe in the high quality investment thesis and I loved watching the video of my first AGM. However I no longer bother unless I really don't have anything better to do as it's all become a bit tedious.

By contrast there are many more moving parts to Berkshire - wholly owned trading companies, a massive share portfolio, and the giant cash generating insurance engine that is GEICO - so Buffett and Munger have much more to review and discuss at the end of each year.

All the best, Si

[scrumpyjack]

Yes, Terry loves a rant, and there's a lot of sense in it, but it starts to sound like a record where the needle is stuck.

Bit like Tim Martin who uses every results announcement for Wetherspoons to have a lengthy Brexit rant.

All good clean fun.

[smicker]

Anyone any idea how to find out which companies are being added? Jan factsheet mentions a new position being built but doesnt name the company but then i read a piece by another fund manager and he reveals it. Is it common knowledge among brokers, other fund managers etc that there are large sellers or buyers of certain shares?

[Itsallaguess]

Anyone any idea how to find out which companies are being added?

Jan factsheet mentions a new position being built but doesnt name the company but then i read a piece by another fund manager and he reveals it.

Is it common knowledge among brokers, other fund managers etc that there are large sellers or buyers of certain shares?

This SECURITIES AND EXCHANGE COMMISSION sheet seems to suggest that new positions in Pepsico and also McCormick & Co have been started fairly recently -

https://www.sec.gov/Archives/edgar/data ... 018_v2.xml

This website claims to track Fundsmith trades (buys and sells..) based on historical SEC filings, and it currently lists Pepsico and Mccormick in the Fundsmith holdings list -

https://fintel.io/i/fundsmith-llp

I can't vouch for the validity or otherwise of either of the above sources of Fundsmith information, but I thought it might interest you to keep an eye on them to see if they do deliver what you're trying to track.

Cheers,

Itsallaguess

[Aminatidi]

I think Pepsico has been in there for a while and isn't new.

Picking a random datasheet from July last year Pepsico are in there.

McCormick & Co seems to be in "in place" of Colgate

https://citywire.co.uk/funds-insider/ne ... k/a1201172

[smicker]

Thank you itsallaguess, thats exactly what i was looking for

[Aminatidi]

2019 AGM Video now online https://youtu.be/d3cRr318ve4

[Fluke]

2019 AGM Video now online https://youtu.be/d3cRr318ve4

Thanks Aminatidi, I attended this year and been waiting for the video to come out, couldn't see it on the website. I'll give it a watch later.