Fundsmith Emerging (FEET) - Crazy idea?

[Steveam]

Well done Simoan - excellent. Many thanks. I still hold but am a lot happier now the price has risen 9%. Still a way to go in terms of the total return.

Again, many thanks.

Best wishes,

Steve

[simoan]

Well done Simoan - excellent. Many thanks. I still hold but am a lot happier now the price has risen 9%. Still a way to go in terms of the total return.

Again, many thanks.

Best wishes,

Steve

Yes, game is not over but the way out is now apparent. I’ve not decided how to proceed yet (hold, sell some, or buy more) as I’ve only returned to the UK today after some time away from the portfolio. Discount to NAV is still 6.8% but a lot can happen in a couple of months…

I’m not sure there’s enough upside to buy more at this stage. Good luck, whatever you decide to do.

All the best, Si

[doug2500]

Well done Simoan

Do i take it is best to just hold on to the stock now and wait for the liquidation? Isn't there a danger that NAV goes down between now and when they start to sell? What are others doing?

This is what I'm pondering. Yes the NAV could move as normal market activity, up or down. Is the general outlook negative enough to sell now and lock in gains? If it stays up there could be an extra 6.8%? by the end of November, but of course there could be a global collapse by then too.

And then there's the 'risk' it could be merged with another IT? I don't know about this but I read a comment it may be of interest that way. I suspect not as the top dogs obviously want out and certainly wouldn't want to just own an IT they're not in control of.

Having the certainty of cash right now has a certain appeal.

[simoan]

And then there's the 'risk' it could be merged with another IT? I don't know about this but I read a comment it may be of interest that way. I suspect not as the top dogs obviously want out and certainly wouldn't want to just own an IT they're not in control of.

Having the certainty of cash right now has a certain appeal.

After my discussion with the Chairman I’d put the chance of a merger very close to zero. I did actually ask him that question.

The NAV has been relatively strong of late, and the reason for the longer term underperformance is now maybe a short term strength I.e. lack of correlation with Emerging Market ETF money flows. So I think I will probably sit tight for now.

[Dod101]

Today's RNS makes me wonder just how independent the Board is. The representative of the Fund Manager (Terry Smith) wants to liquidate and so does the IT Chairman but note that it is the fund manager who seems to be making the running here. It is not usually for the Fund Manager to express an opinion on this sort of thing. That is or should be up to the Board. In theory, the Board employs the Fund Manager.

Dod

[simoan]

So, as I write the discount to NAV is back over 7% (NAV = £14.47). I'm asking myself the Clint Eastwood question: "Are you feeling lucky punk?". The NAV is now benefitting from the decline of sterling against the Indian rupee and US dollar because over 60% of companies held are listed on those stockmarkets. Hong Kong and China listed stocks make up a further 16%.

At the moment I think I will stand pat, because investing based on currencies is well above my pay grade. However, were the discount to widen further in the coming weeks...

All the best, Si

[simoan]

So now we have a timescale for the liquidation: https://www.investegate.co.uk/fundsmith ... 21574628C/

At this point anything over 1300p per share returned and I'd be deliriously happy given my average price of ~1150p. A nice little earner whilst everything else has been tanking. Worth noting that 45% of FEET is invested in India and the main Indian bourses are only down ~2% YTD. Rupee has also been strong against the Pound (up 9.5%). Let's hope that stays the case for the next couple of months...

[doug2500]

I notice it's 9% cash end of sept already.

Do you think they will be selling down already? I would if it's a done deal in their position. A 25% correction at this stage would snatch defeat from the jaws of vict........well jaws of positive outcome at least.

[simoan]

I notice it's 9% cash end of sept already.

Do you think they will be selling down already? I would if it's a done deal in their position. A 25% correction at this stage would snatch defeat from the jaws of vict........well jaws of positive outcome at least.

Yes, I noticed it was 9.1% cash at end of Sept up from 4.4% at end of August. I haven't checked but I presume they are allowed to hold up to 10% cash maximum, so it makes sense to liquidate the maximum possible ahead of time. I think they know it's a done deal as they have been talking to all the large institutional holders, and given the business model of most of them is to profit from closing gaps between NAV and the share price of closed-end funds...

As you say, still possible for the market to claim victory, but either way, Santa will be putting a large slug of cash back into my SIPP which can be used to pick up some bargains in the New Year. Cash is not the worst place to be right now.

[RajK]

Will the liquidators be some external entity that will take some fat fees as part of the job or is it done by the existing managers? Concerned that the liquidators are more interested in earning fees then doing the best for the shareholders.

I see further down in the note posted that it will be some reps from Ernst and Young . They say Joint Liquidators? Is that Ernst and Young and Fundsmith LLP with the former in a compliance role?

[simoan]

Will the liquidators be some external entity that will take some fat fees as part of the job or is it done by the existing managers? Concerned that the liquidators are more interested in earning fees then doing the best for the shareholders.

I see further down in the note posted that it will be some reps from Ernst and Young . They say Joint Liquidators? Is that Ernst and Young and Fundsmith LLP with the former in a compliance role?

They also say the total cost of liquidation will be £1.27m which is 0.36% of NAV as of the close yesterday. You have to remember Terry Smith and other members of Fundsmith LLP have large vested interests here (Terry Smith owns 3.2% and Mark Lawrence 1% of FEET) so are not going to let Ernst & Young get any more than the going rate.

I'm currently thinking of offloading half of my holding as I'm happy taking some money off the table. "A bird in the hand" and all that...

All the best, Si

[BullDog]

Yes, it seems the discount to NAV has all but disappeared. Well done to those who saw this coming and bought. To me it looks like there's not much case for hanging onto FEET while there's countless bargains out there to redeploy the cash from a FEET sale.

[simoan]

Yes, it seems the discount to NAV has all but disappeared. Well done to those who saw this coming and bought. To me it looks like there's not much case for hanging onto FEET while there's countless bargains out there to redeploy the cash from a FEET sale.

Agreed. This is the conclusion I have come to after thinking about it. Now only a 2.45% discount to NAV and so I have just sold a third of my holding. May offload some more later...

[doug2500]

It's a shame the discount has closed as much from the nav falling as the price rising.

It's still worth considering selling though because although I expect the discount to remain closer now, the price and nav may well fall in these turbulent times.

[simoan]

It's a shame the discount has closed as much from the nav falling as the price rising.

It's still worth considering selling though because although I expect the discount to remain closer now, the price and nav may well fall in these turbulent times.

Call me stupid, but for complete transparency, I've just bought more FEET this morning because the discount to NAV (as of close on Friday) is now back over 9%.

All the best, Si

[flyer61]

I have joined you simoan. Hopefully the 18th of December will see a sizeable chunk of the investment back in cash. With the rest of it to follow shortly after. I'm betting TS will want this wrapped up fairly quickly. The risk is a material reduction in asset value between now and mid November of course it could go the other way as well..

[simoan]

I have joined you simoan. Hopefully the 18th of December will see a sizeable chunk of the investment back in cash. With the rest of it to follow shortly after. I'm betting TS will want this wrapped up fairly quickly. The risk is a material reduction in asset value between now and mid November of course it could go the other way as well..

Absolutely. You have to judge the risk/reward of buying now for yourself, and buying at a 9% discount to NAV seemed a good enough margin of safety to me.

As time goes on you would expect the share price and NAV to move within 2-3% of one another. There are now only 13 trading days left with the shares delisted on Friday 11th November and assuming the vote goes through, liquidation will start on Monday 14th. I believe the trust can hold up to 20% cash so it will be interesting to see the latest fund sheet in a week’s time.

All the best,Si

[terminal7]

As a holder and nursing a small loss, I have been lurking on this board. Despite the above recent views, the price keeps edging down. This within a context of a degree of stability in the markets. Does anyone know what the likely timetable would be post 14/11 for a payout?

It does state:

Expected date for payment of Initial Distribution*
on or about 18 December
* Actual date to be determined by the Joint Liquidators

Any idea what an 'initial' distribution will actually look like?

T7

[simoan]

As a holder and nursing a small loss, I have been lurking on this board. Despite the above recent views, the price keeps edging down. This within a context of a degree of stability in the markets. Does anyone know what the likely timetable would be post 14/11 for a payout?

It does state:

Expected date for payment of Initial Distribution*
on or about 18 December
* Actual date to be determined by the Joint Liquidators

Any idea what an 'initial' distribution will actually look like?

T7

If you look at the latest fundsheet you will see where the investments are listed. Most holdings are large, liquid companies on major stock markets, so I would expect maybe 80% or more to be returned in the initial distribution. The delay for some holdings will likely be because they are listed on less liquid stock markets (i.e. in the 11.4% listed under "Other Countries") or because of the liquidity of the holding itself, so selling without the price moving against them in this case is likely to be an issue. Then again I could be completely wrong! We're all guessing at this point as there is nothing definitive in the public domain.

[flyer61]

Si,

I wonder if they have done anything about the FX risks? Sterling's recent rise is unhelpful in this context if they have no hedging.

What percentage upside do you see today? It is possible STG has now shot it's bolt and will continue it's descent.

Thinking of adding more...