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Fundsmith....New Holding

Closed-end funds and OEICs
KnightOfSpring
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Re: Fundsmith....New Holding

#462989

Postby KnightOfSpring » December 3rd, 2021, 9:11 pm

Thanks and good luck with ULVR. I think next week, I might place an auto sell on ULVR stock so that if the price gets back to what I paid, it gets sold. I am not so far away that a day or two uptick in the price wouldn't break even for me. I think I will start to think about reinvesting the money. I have pretty much lost faith in ULVR.


Thanks. Good luck with what you decide to re-invest the proceeds into.

OLTB
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Re: Fundsmith....New Holding

#463026

Postby OLTB » December 4th, 2021, 9:01 am

KnightOfSpring wrote:
Thanks and good luck with ULVR. I think next week, I might place an auto sell on ULVR stock so that if the price gets back to what I paid, it gets sold. I am not so far away that a day or two uptick in the price wouldn't break even for me. I think I will start to think about reinvesting the money. I have pretty much lost faith in ULVR.


Thanks. Good luck with what you decide to re-invest the proceeds into.


That was a comment that resonated with me during the interview - it’s all well and good selling a holding, but what is the ‘better’ investment to replace it.

Cheers, OLTB.

BullDog
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Re: Fundsmith....New Holding

#463027

Postby BullDog » December 4th, 2021, 9:14 am

OLTB wrote:
KnightOfSpring wrote:
Thanks and good luck with ULVR. I think next week, I might place an auto sell on ULVR stock so that if the price gets back to what I paid, it gets sold. I am not so far away that a day or two uptick in the price wouldn't break even for me. I think I will start to think about reinvesting the money. I have pretty much lost faith in ULVR.


Thanks. Good luck with what you decide to re-invest the proceeds into.


That was a comment that resonated with me during the interview - it’s all well and good selling a holding, but what is the ‘better’ investment to replace it.

Cheers, OLTB.

Absolutely, it's not an easy market at the moment to make decisions like that.

77ss
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Re: Fundsmith....New Holding

#463037

Postby 77ss » December 4th, 2021, 11:13 am

OLTB wrote:
KnightOfSpring wrote:
Thanks and good luck with ULVR. I think next week, I might place an auto sell on ULVR stock so that if the price gets back to what I paid, it gets sold. I am not so far away that a day or two uptick in the price wouldn't break even for me. I think I will start to think about reinvesting the money. I have pretty much lost faith in ULVR.


Thanks. Good luck with what you decide to re-invest the proceeds into.


That was a comment that resonated with me during the interview - it’s all well and good selling a holding, but what is the ‘better’ investment to replace it.

Cheers, OLTB.


One does not necessarily need a single replacement - which carries a fair degree of risk. Depending upon ones objectives/overall portfolio etc.

I sold ULVR earlier his year, using the proceeds to top up a number of my other holdings. About 70% into ITs and the rest into DGE, HLMA and SPX.

This fits with my general direction of travel - fewer holdings and more in ITs.

dealtn
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Re: Fundsmith....New Holding

#463237

Postby dealtn » December 5th, 2021, 12:19 pm

BullDog wrote:
KnightOfSpring wrote:
You know, I think you're right. I apologise if I made a mistake. I can't see a Unilever sale in the last 6 months monthly fact sheets. In fact, having looked, it is Blue Whale Growth Fund (another fund that I follow) that sold out of Unilever this last few months. Sorry about that.


No problem. I'm not normally so sharp on these things but Unilever is about 14% of my portfolio and Terry Smith is my favourite Fund Manager so it's something a keep a close eye on. Terry certainly made reference to Unilever was being in danger of being kicked out but has since said that with the distribution network it has "it should probably be alright".

Thanks and good luck with ULVR. I think next week, I might place an auto sell on ULVR stock so that if the price gets back to what I paid, it gets sold. I am not so far away that a day or two uptick in the price wouldn't break even for me. I think I will start to think about reinvesting the money. I have pretty much lost faith in ULVR.


What's so special about the price you bought it? All you are doing is price anchoring which is a waste of mental energy and purely psychological. Either it's a good investment at the current price, or it isn't and there are better choices.

ADrunkenMarcus
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Re: Fundsmith....New Holding

#463243

Postby ADrunkenMarcus » December 5th, 2021, 12:35 pm

BullDog wrote:I have pretty much lost faith in ULVR.


How long have you held?

Even the best companies can go through periods of 'poor' share price performance. Unilever has current challenges it is dealing with. I don't think it necessarily follows that the business model is broken in the long term. It may in fact be better to accumulate at lower prices.

I bought in 2013 as a long term hold. Although I think it's cheap at today's prices, the shares are up 56% and I'll have had about 43% of the original book cost in dividends by the end of the current year. Not amazing or Tesla-like but it's doubled on a nominal basis in eight years. Dividend per share has compounded over 7% during that time (the same as the CAGR in dividends from 1929 to 2020) and I'm getting a nominal yield of 5.9% on my book cost.

It'll never shoot the lights out but it will grind out respectable returns over long periods of time IMHO.

Best wishes


Mark.

ADrunkenMarcus
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Re: Fundsmith....New Holding

#463245

Postby ADrunkenMarcus » December 5th, 2021, 12:36 pm

77ss wrote: DGE, HLMA and SPX.


I do love DGE and SPX. HLMA, too, if I'd got in when it was less expensive!

Best wishes


Mark.

77ss
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Re: Fundsmith....New Holding

#463294

Postby 77ss » December 5th, 2021, 3:30 pm

ADrunkenMarcus wrote:
77ss wrote: DGE, HLMA and SPX.


I do love DGE and SPX. HLMA, too, if I'd got in when it was less expensive!

Best wishes


Mark.


Don't we all!

But having missed a better entry point doesn't make a share uninvestable. Lots of psychology here. Better late than never.

I was late to the party and have only held them for 5/3.5/2 years. Happy, so far...

Easier (and safer) to top up winners, as I have done, than to buy a whole new holding.

wrt to your earlier post about ULVR;

It'll never shoot the lights out but it will grind out respectable returns over long periods of time IMHO.

I quite agree. I sold for various reasons, but may well rebuy in the next tax year.

I held it in my dealing account, so there were tax/CGT considerations. Next year's ISA perhaps.

ADrunkenMarcus
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Re: Fundsmith....New Holding

#463298

Postby ADrunkenMarcus » December 5th, 2021, 4:05 pm

77ss wrote:But having missed a better entry point doesn't make a share uninvestable. Lots of psychology here. Better late than never.


Very true.

Spirax looked expensive when I bought at a p/e of 23 in 2015. Then the p/e more than doubled - as did earnings! It's compounded at 32% over the six years since and is up over five-fold.

Best wishes


Mark.

doug2500
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Re: Fundsmith....New Holding

#463334

Postby doug2500 » December 5th, 2021, 7:04 pm

Indeed, I have a wee bit of DGE via a holding of fundsmith and I think some spirax via SSON but I've had spirax and halma on my watchlist for years watching them get more expensive and yes, I wouldn't buy now but I sure wish I'd bought years ago when they were just expensive (rather than really expensive) instead of just adding them to a list.

ADrunkenMarcus
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Re: Fundsmith....New Holding

#463340

Postby ADrunkenMarcus » December 5th, 2021, 8:25 pm

doug2500 wrote:Indeed, I have a wee bit of DGE via a holding of fundsmith and I think some spirax via SSON but I've had spirax and halma on my watchlist for years watching them get more expensive and yes, I wouldn't buy now but I sure wish I'd bought years ago when they were just expensive (rather than really expensive) instead of just adding them to a list.


Even DGE has become more highly rated to quite a significant degree, over time. My own holding dates back to 1998 and the dividend yield then was about 3.2%. Despite consistent dividend growth, compounding somewhat under 7% p.a., even the projected yield for the coming year has slipped under 2%.

I know of someone who trimmed SPX earlier this year a little over £100 a share, because they thought it was expensive, yet it touched £172.25 some weeks back. They missed a huge annual gain. I recognise SPX is expensive but won't take any action to trim. If it ever gets substantially cheaper, I may even add.

I do like quality and I hold loads of Smithson, but potential valuation compression may provide a headwind in the coming years.

Best wishes


Mark.

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Re: Fundsmith....New Holding

#469990

Postby Backache » January 3rd, 2022, 5:35 pm

Interesting in October they announced they were building a new holding and disclosed a new country undisclosed holding of 0.4% of the fund which appeared to fall to 0.1% by the end of the month of November and now appears to have been sold altogether.

BullDog
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Re: Fundsmith....New Holding

#472224

Postby BullDog » January 11th, 2022, 9:59 pm

Those who are interested may wish to read Smith's annual letter to shareholders.

https://www.fundsmith.co.uk/media/3wcng ... olders.pdf

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Re: Fundsmith....New Holding

#472972

Postby Humeau » January 14th, 2022, 8:17 am

The contrast between Stephen Yiu's views and Terry Smith's on AMZN is pretty stark. Blue Whale started to exit just as Fundsmith were buying.

Although TS was slow in understanding that AMZN was very much more than a low margin retail business, I think Yiu has come to the wrong conclusions here and his analysis is correct in parts, but essentially flawed as a whole.

In my view, short term margin pressures on the retail side and some erosion of market share in the cloud business, will be outweighed by the transition to higher margin businesses longer term. Amazon has an impressive array of businesses that have highly beneficial unit economics and I fully expect these to be further developed and added to in the future.

I don't think Terry Smith has bought any duds in recent years and don't expect this to change with his latest purchase. He might have been too patient with some underperformers, but adverse comments normally signal the exit door is close. Sage being a recent example and Unilever looking like the next. PM looked to be entering the jury is out territory at last year's AGM too.

I have added AMZN to my portfolio.

BullDog
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Re: Fundsmith....New Holding

#472978

Postby BullDog » January 14th, 2022, 8:37 am

Humeau wrote:The contrast between Stephen Yiu's views and Terry Smith's on AMZN is pretty stark. Blue Whale started to exit just as Fundsmith were buying.

Although TS was slow in understanding that AMZN was very much more than a low margin retail business, I think Yiu has come to the wrong conclusions here and his analysis is correct in parts, but essentially flawed as a whole.

In my view, short term margin pressures on the retail side and some erosion of market share in the cloud business, will be outweighed by the transition to higher margin businesses longer term. Amazon has an impressive array of businesses that have highly beneficial unit economics and I fully expect these to be further developed and added to in the future.

I don't think Terry Smith has bought any duds in recent years and don't expect this to change with his latest purchase. He might have been too patient with some underperformers, but adverse comments normally signal the exit door is close. Sage being a recent example and Unilever looking like the next. PM looked to be entering the jury is out territory at last year's AGM too.

I have added AMZN to my portfolio.

Indeed. Interesting, only one of them can be right. I think Yiu is more active in portfolio churn than Smith anyhow. Yiu exited Unilever a while ago while Smith still holds it for example. I still have both BW and FS.

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Re: Fundsmith....New Holding

#474824

Postby Humeau » January 20th, 2022, 6:30 pm

Kenton23 wrote:
crazypanda wrote:
Kenton23 wrote:Is it just me that finds this strange? I’ve just rewatched Terry’s comments on this from the 2021 AGM in which he says, essentially, that the team don’t like Amazon as the retail part doesn’t make (much) money and is cross subsidised by the web services business. If he could take just the web services part he’d be interested. This was only c. 8 months ago.

Other than speculation about the web services part being spun off, can anyone make an educated guess as to what has changed?

Thanks in advance. To be clear, I’m not being critical as the FS team have been v good for me and I remember particularly being a bit aghast when they bought Facebook which so far has been a good investment and prescient.

Any views welcomed. Thanks.


I have absolutely no doubt that Julian has persuaded him that the other parts of the business are growing fast and are much more profitable. The best explanation of this, that I've seen is from Bull on Twitter.

I quote

''Amazon has 2 low margin segments 1P & physical stores. They have 4 high margin segments: AWS, 3P, Ads, Subscriptions. In 2019, pre pandemic Amazon did $280b in revenue, this year we will do $460-470b. In 2019 "services" were $122.08B, this year, so far we're $164B thru 3q

by the end of 2021, "services" will be north of $220b. Yes the high margin alone will be about 80% of all the business amazon did just 2 years ago. The 1P/physical is the other $240-250b amazon will do this year.

So with that out of the way, lets discuss why 3P and not AWS is $AMZN main business. 3p this year has been $73B thus far, now, that is Amazon's cut, the real GMV is likely $300b on that figure, but Amazon only reports their take of it. The chart below is a depiction vs AWS

Seller fees are staggering at Amazon. First $AMZN charges 15% just to sell on the platform whether you ship through them or not, then they charge a myriad of fees for pick and pack, storage, etc. Amazon's cut of fees is now approaching 34%.

but now, Amazon has just opened 350 more facilities this year, they can take on alot of new products, handle more inventory from sellers but on the recent call the CFO said they're contraints are workers, its difficult to add so many, but why are 350 new facilities so important?

aside from faster 1 day/same day shipping, Amazon's seller fees being their most profitable segment, well look at these storage rates. And they're going up in January, $2.40 per cubic foot to store things in the warehouses. The more space amazon has, the more $ they can generate

The Amazon flywheel is getting stronger by the day, while Analysts like Youssef Squali say people want to buy online & pick up in store, Amazon is making that unnecessary w/ same day and 1 day shipping for free. The capex is building a deeper moat w/ a wider gap.''

Plus more for the cloud, the ad business and subscriptions.

The shares have stalled whilst a massive shift to much more profitable segments has taken place. The network effects will bring higher margins and increased profitability in due course. The share price will follow and I suspect it is not unlike Microsoft which went nowhere for several years and then shot up.

I had come to similar conclusions to that contained in the post before reading it and bought very recently.

I have no doubt that Fundsmith's thinking is along similar lines. As Terry Smith says 'Better late than never'. The share price is now lower than when he bought in the autumn!

Those interested may want to read the original post pinned by BUll on Twitter.

https://twitter.com/amazonholder1/statu ... 6848930817

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Re: Fundsmith....New Holding

#474827

Postby BullDog » January 20th, 2022, 6:43 pm

Thanks. The different assessments Smith and Yiu at Blue Whale clearly have of Amazon is interesting. Yiu sells as Smith buys. (Well, it seems interesting to me, at least).

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Re: Fundsmith....New Holding

#476092

Postby Humeau » January 25th, 2022, 4:26 pm

There you go Terry Smith fans. Medirectalk has what will be much of his AGM intro and talk on YouTube. The explanations for AMZN and as yet non disclosed positions are relevant to this thread.

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Re: Fundsmith....New Holding

#476097

Postby scrumpyjack » January 25th, 2022, 4:41 pm

BullDog wrote:Thanks. The different assessments Smith and Yiu at Blue Whale clearly have of Amazon is interesting. Yiu sells as Smith buys. (Well, it seems interesting to me, at least).


As ever it takes 2 views to make a market :D

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Re: Fundsmith....New Holding

#476131

Postby Humeau » January 25th, 2022, 6:25 pm

The video also includes some very negative comments on management, plus a little aside that he has Amazon on the brain, at the moment.

https://www.youtube.com/watch?v=ztiQlJjGQJ4&t=1436s

No doubt the arrival of Peltz, might ease his worries, even though he hates activists. However, it will take some time, to turn around the business; P&G took years. I can guarantee that the Dutch government will do everything to prevent a takeover. He must be looking for the exit unless he feels a change of management or takeover will happen fairly soon, and he is not that type of event driven investor.

I'd be surprised if he doesn't dump what's left to buy more AMZN or the French company that he has started to buy.


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