Fundsmith new holding

[Avalaugh]

Fundsmith has a new holding in the Jan factsheet, does anyone know what this is?

Thanks

[toofast2live]

No one knows until they have built up their full position

[Avalaugh]

The news about Church and Dwight did pop up in the media before Fundsmith officially announced it, hoping someone may have equally found something,
Cheers

[mc2fool]

"Star fund manager Terry Smith is building a position in Clorox (CLX.N), the US cleaning products maker that has raised its dividend for the last 42 consecutive years.

Citywire AAA-rated Smith began building the position last month and revealed the stock's identity in his annual letter to the £18.8bn Fundsmith Equity fund’s investors."

https://citywire.co.uk/funds-insider/ne ... h/a1314199

[Dod101]

"Star fund manager Terry Smith is building a position in Clorox (CLX.N), the US cleaning products maker that has raised its dividend for the last 42 consecutive years.

Citywire AAA-rated Smith began building the position last month and revealed the stock's identity in his annual letter to the £18.8bn Fundsmith Equity fund’s investors."

https://citywire.co.uk/funds-insider/ne ... h/a1314199

Thanks for the link to the Annual Letter. Is there or likely to be one for Smithson, does anyone know? I suppose the Annual Report is most likely to be in effect the Letter as it is of course an Investment Trust, unlike Fundsmith.

Dod

[Avalaugh]

Thanks for posting

[Backache]

The news about Church and Dwight did pop up in the media before Fundsmith officially announced it, hoping someone may have equally found something,
Cheers

Did Fundsmith main fund ever announce it? And did the main fund ever hold it?
I saw the sustainable fund held it and then exited the position. I never saw it appear on the main funds literature, shortly after they announced they were building a new position they announced a holding of Brown Forman but I never saw one of Church and Dwight.

[ADrunkenMarcus]

I assume they feel Brown FormAn fits their criterion of not over-paying!

Best wishes

Mark

[Backache]

I assume they feel Brown FormAn fits their criterion of not over-paying!

Best wishes

Mark

As he's spoken in pretty glowing terms about Brown Forman in the past particularly about an American liquor company continuing profitable existence through prohibition but has said it was too expensive previously I guess he feels it must do.

[ADrunkenMarcus]

There isn't much data showing for Brown-Forman on Sharepad. The future forecasts are not showing today.

I prefer free cash flow, but on a price to earnings basis the company is trading on its highest since at least 2005 (the data before that is now shown). However, the company's ROCE and CROIC are consistently strong. The financials chart going back to 1990 shows the operating margin at a new high, having expanded over that time from 1990 to 2018 from about c.22% to c.34% - an increase of 50%. On the basis of the expanding operating margin, you could argue the company is more valuable than it used to be.

I was interested in Brown Forman in 2014 but held off. I wish I hadn't, because the business has grown, its rating is, I think, higher, and I'd have gained significantly on currency as well because the £1/$ rate was then £1.70 whereas it's now £1.30.

Best wishes

Mark.

[KnightOfSpring]

Two more new holdings in March. Anyone know or want to guess what they are? I think Terry implies that both of them have strong exposure to China. Talks about "a classic glitch" also which seems less enlightening to me. Also a letter to shareholders concerning the virus

[flyer61]

Maybe Diageo? But I think that is already within the fund.

[KnightOfSpring]

Yes Diageo is already held in the fund. Seems a firm favourite but never seems to make it into their top 10 holdings. It is mentioned in an interesting recent article in L'Echo (English translation at the bottom). I would post a link but I think I haven't posted enough to earn link priviledges (seems fair enough, otherwise easy for spammers) but easy to find if you go to the Fundsmith News section (24 Mar 2020)

[KnightOfSpring]

Remy Cointreau has certainly had a glitch (requiring a change of Chief Executive) and significant Chinese exposure (Lindsell Train have talked about it as I think being most exposed to China of the Western drinks companies). However seems that the shares have held up very well since the virus hit, perhaps due to expectation that new CE is getting things back on track (I'm just guessing here). Also with Diageo and Brown Forman, Terry may feel he has enough spirits exposure (although he is not too fussed about having large exposure if he likes the sector characteristics).

[Avalaugh]

We always do well in spotting these, has anyone found what they are yet?
Cheers

[flyer61]

All of these I believe are high quality businesses. I am casting my eye over them with a view to some selective purchases.
Hopefully might give some ideas. Obviously quite a few are non UK listed businesses.

FOX Corp - A
Match Group Inc
Twitter Inc
Facebook Inc
Alphabet Inc -
Take-Two interactive
New York Times - A
Levi Strauss - A
Marriott Intl - A
Yumi Brands
Adidas AG
Starbucks Corp
Lowes Cos Inc
Hilton Worldwide
Lululemon Ath
Ferrari NV
LVMH Moet Henne
Amazon Com
TJX Cos Inc
Domino Pizza
Diageo PLC
Uniiever PLC
Estee Lauder
L'Oreal
Berkshire Hath - A
Glaxosmithkline
Straumann Hldg - R
Intuitive Surgical
Veeva Systems
Safran SA
Northrop Grumman
Experian PLC
NVIDIA Corp
Intuit Inc
Autodesk Inc
Texas Instruments
Adyen NV
Mastercard Inc
Seagate Technology

The above is a list of high quality outfits - I wonder if any of these fit his cryptic remarks?

[flyer61]

I'm wondering if it is Adidas?

[tikunetih]

We always do well in spotting these, has anyone found what they are yet?

Bit of fun...

When Clorox (founded 1913) was added in December, their portfolio's Average Co. Founded year remained unchanged at 1925 - "1913" being too close to move the dial.

Today, the Average Co. Founded year is reported as 1928, so the additions have moved the dial and suggest an Average Co. Founded year for the two new additions in the 1970 ballpark.

That could comprise two middle-aged businesses, or one newer and one older. For example, if the newer one was eg. Alphabet (1998) or other business of similar modern-ish vintage, the older one would need to be a late-1930s/early-1940s-founded company.

Remy Cointreau has two possible values for year of foundation: 1724 or 1990. If the former date was used, this is so old that it would have moved the portfolio's Average Co. Founded year lower than 1925, regardless of the 2nd new holding, not higher, so that date can be ruled out. If the latter founding year (1990) for Remy Cointreau was used, then the other new holding would have to be a 1950-era company.

Hours of lockdown entertainment available.

[KnightOfSpring]

Good spot on the Year Founded! Terry really laid into Google in that L'Echo article I mentioned "Since its creation, the company has already made 200 acquisitions, all of which ended in disaster." Ok Alphabet is not part of Google, but don't think he would be so critical of it if he had just opened a new holding in a closely related company.

[tikunetih]

Good spot on the Year Founded! Terry really laid into Google in that L'Echo article I mentioned "Since its creation, the company has already made 200 acquisitions, all of which ended in disaster." Ok Alphabet is not part of Google, but don't think he would be so critical of it if he had just opened a new holding in a closely related company.

Me naming Alphabet was just an example. I agree, based on the l'Echo interview comments, it would be a surprise if it turned out to be one of the two additions!

I should point out though that the "made 200 acquisitions, all of which ended in disaster" comment is not quite correct, nor does the further comment that "Google bought these companies to kill the competition" always apply.

For example, Google acquired Android Inc for ~$50 million in 2005; there are now over 2.5bn active Android devices running Google services, cementing and drawing people into their ecosystem, generating valuable data and ultimately ad revenues.

Youtube was acquired for $1.65bn in 2006 and last year generated $15bn in ad revenues from it and a couple of billion (annualized) in subscription revenues, profitability unknown/undisclosed.

DeepMind was acquired for ~$500M in 2014, is fairly early on its journey, but seems likely to play an important role in progress towards Artificial General Intelligence.

Google/Alphabet can at times be infuriating with some of its decision making, and is often highly speculative with acquisitions sitting there as cost rather than profit centres for many years. They play a very long game, such that some of these businesses may go on to become immensely important and valuable, but visibility for outsiders is limited. Probably not one for Terry's screening methods and portfolio, granted.