The Lemon Fool

Terry Smith's commentary on Facebook was interesting. He views the regulatory threat as a benefit in that whilst it may increase costs somewhat it puts up huge barriers to entry for competitors, an analogy to the tobacco sector being made.

The video was interesting, perhaps a bit too similar to previous ones but as his strategy has not changed then that is to be expected. Gives a good account of the reason behind purchasing Facebook which seems to have upset a few. Batted off the complaint of too many white males within the company and spoke a little about Smithson. It is great that you get to hear from them unlike the anonymous majority of fund managers.

The key for me is the investment strategy slide
1. Only invest in good companies
2. Don't overpay
3. Do nothing
There is much to be said for it. Personally I think 2 is the hardest. How much of a premium should you be willing to pay for a company earning a 25% vs a 22% ROE for example?

Fundsmith has done very well. Perhaps the market has historically under-priced quality companies and their growth prospects. Perhaps it will continue to do so and Fundsmith will continue to thrive. There is always the risk that in the future the market prices fairly or indeed over-prices quality companies which will make their strategy less rewarding versus others and they will need to revise 3. They evidently doesn't feel that point has been reached. They sold two holdings; 1 because they lost faith in the management and another because it was only 1% of the fund and they want a concentrated portfolio. None were sold because they had become expensive.

I don't own Fundsmith but I own three fund holdings; L'Oreal, Estee Lauder and Microsoft. All have done me very well but I find it difficult to see any of them as under-priced today. Maybe I am part of a market that, despite my best efforts, still undervalues quality. At some price point if it makes no sense to overpay it makes no sense to hold either. Microsoft I top sliced enough to cover my cost and it has doubled since then. I should have done nothing. I have done nothing with the other two but at some price point I will be tempted.

Pendrainllwyn

I do not hold Fundsmith but was interested to see that the Sunday Times yesterday was bemoaning the fact that Fundsmith does not regularly disclose its holdings. Apparently they will tell you if you ask them.

Presumably Smithson will disclose its holdings as it is structured as an investment trust.

Dod

The FEET annual report was published on Thursday, so far considerably less successful than the main fund, but it contains his thoughts which as you would expect are positive.
https://www.feetplc.co.uk/latest-news/n ... %3a466130T

Dod101 wrote:I do not hold Fundsmith but was interested to see that the Sunday Times yesterday was bemoaning the fact that Fundsmith does not regularly disclose its holdings. Apparently they will tell you if you ask them.

Presumably Smithson will disclose its holdings as it is structured as an investment trust.

Dod

They are in the interim report.
https://smithson.co.uk/docs/default-sou ... eport-(web).pdf?sfvrsn=6

The Sunday Times article was decrying the fact that Fundsmith did not disclose ALL its holdings. In response Fundsmith had argued that they did so in their Annual Report.

Backache wrote:

Dod101 wrote:I do not hold Fundsmith but was interested to see that the Sunday Times yesterday was bemoaning the fact that Fundsmith does not regularly disclose its holdings. Apparently they will tell you if you ask them.

Presumably Smithson will disclose its holdings as it is structured as an investment trust.

Dod

They are in the interim report.
https://smithson.co.uk/docs/default-sou ... eport-(web).pdf?sfvrsn=6

Your link tells me that the resource cannot be found. Neither can Google find it. Interim Report already?

Dod

Like Pendrainllywn I hold L'Oreal, Estee Lauder and Microsoft. Microsoft being my biggest equity holding. The growth runway for all 3 is excellent so I will not be selling. Looking around for stocks that have long growth runways and TS has done the research I find two that I like. Christian Hansen (CHR) and Sabre Corp (SABR). Sabre share price seems to be at a good entry point. ROE around 40%. On a multi year view think it could do well.

Dod101 wrote:
Your link tells me that the resource cannot be found. Neither can Google find it. Interim Report already?

Dod

Apologies, I cannot have copied it correctly and am now on a mobile device whose copying feature is not good.
But yes there is an interim report which can be found on the Smithson website, which in turn is easily found from the Fundsmith website.

Thanks Bachache. I will do a further search but I am just going out now.

Dod

Just a quick one. Found the Interim Report on the Smithson site to 31 December. Only 29 holdings, few of which I know much about. Interesting though. Will look more closely later.

Thanks again Bachache.

Dod

Dod101 wrote:

Backache wrote:They are in the interim report.
https://smithson.co.uk/docs/default-sou ... eport-(web).pdf?sfvrsn=6

Your link tells me that the resource cannot be found. Neither can Google find it. Interim Report already?

The problem is that phpBB decides that a ")" isn't part of a url. The trick is to put it within URL tags.
https://smithson.co.uk/docs/default-source/smithson-annual-reports/252608-smithson-interim-report-(web).pdf

Just to reiterate my earlier post on this. From my recollections, having quickly read the article in the Sunday Times whilst round a friend's house, Fundsmith had said that the full listing was in the FINAL year end report, (not the interim report, nor their regular factsheets).

I don't hold Fundsmith and I haven't checked whether that is so.

richfool wrote:Just to reiterate my earlier post on this. From my recollections, having quickly read the article in the Sunday Times whilst round a friend's house, Fundsmith had said that the full listing was in the FINAL year end report, (not the interim report, nor their regular factsheets).

I don't hold Fundsmith and I haven't checked whether that is so.

I must admit I don't recall ever having seen a full list in any of their literature , not that it bothers me. They clearly state the number of holdings they have and comment on how well/ poorly many of the individual holdings are doing. As an investor they give me far more information about why they hold what they do than the vast majority of managers, though I hold mainly IT's in the active group rather than OEIC's.

Each monthly factsheet lists the top 10 holdings in order. You can derive the remainder from the earlier factsheets where they talk about purchases/sales and top 10s.

Here is my analysis of the holdings from the Feb factsheet (top 10 in order of size, others in no particular order). I update it each month:

1 Paypal US
2 Microsoft US
3 Waters Corp US
4 Amadeus Spain
5 Philip Morris US
6 Intuit US
7 Estee Lauder US
8 Stryker Corp US
9 Facebook US
10 Novo Nordisk Den
11 Automatic Data Processing US
12 Intercontinental Hotels UK
13 Reckitt Benkiser UK
14 Pepsico US
15 IDEXX US
16 Unilever UK
17 3M US
18 Visa US
19 L'Oreal France
20 Kone Finland
21 Becton Dickinson US
22 Sage UK
23 Intertek UK
24 Johnson & Johnson US
25 Diageo UK
26 Coloplast Den
27 McCormick & Co US

richfool wrote:Just to reiterate my earlier post on this. From my recollections, having quickly read the article in the Sunday Times whilst round a friend's house, Fundsmith had said that the full listing was in the FINAL year end report, (not the interim report, nor their regular factsheets).

I don't hold Fundsmith and I haven't checked whether that is so.

It isn't included in the short-form annual report which is posted publicly on their website. The full list is available on the long-form report that is available on request (at least to those who hold Fundsmith directly), this was mentioned in one of their ASMs on Youtube (not this year's and since I splurge watched the other ASMs I can't remember the specific year).

From the supplementary information document for direct investors:

Every six months you will receive a statement showing a valuation
of your investment as at 5 April and 5 October each year, together
with a list of transactions during the six month period. Statements
are issued within a month following the statement date. In
addition a copy of the short form annual and half-yearly Report
and Accounts for the Fund will be sent to you. Long-form versions
of the Fund’s Report and Accounts are available on request.

This is annoying as a holder of Fundsmith, I can understand the secrecy to an extent - it wouldn't be a hard portfolio to replicate - but it'd be nice to have the list at least annually.

PS. can't help but notice it's anti-Brexit supremo Gina Miller going after Brexit supporter Terry Smith.

Guys - anyone know or understand what the difference is between Fundsmith T, R and I funds????

Unless I'm going blind I can't see this explained anywhere on their web site!

Bhoddhisatva wrote:
Guys - anyone know or understand what the difference is between Fundsmith T, R and I funds????

Unless I'm going blind I can't see this explained anywhere on their web site!

I asked a similar question around this time last year, and there was a good discussion here if you're interested in taking a look -

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=10829&p=130649#p130506

The short answer is that the T-class are bought direct from Fundsmith, whereas the I-class are the ones to buy via your broker - they achieve the larger minimum-investment which you subsequently buy into if desired....

You've then got a follow-on decision to make as to whether you want to get the income or accumulation versions of the class you want to buy...

You may still be able to buy the T-class version via your broker, but it's likely that you'll be doubling up on fees if you choose to, so if you check the OFR's (ongoing fund charges) via your broker, you'll hopefully be able to confirm that the I-class will be the best option for you, as is shown here from the Fundsmith fact-sheet -



Fundsmith fact-sheet URL link - https://www.fundsmith.co.uk/fund-factsheet

Cheers,

Itsallaguess

Sorry, why would anyone with £1k buy the I class?

And what can I buy on HL.