The Lemon Fool

BullDog wrote:

simoan wrote:The 2024 AGM video is now available on the website here; https://www.fundsmith.co.uk/tv/

Always worth a watch IMO especially with much more time given over to the Q&A these days. Interesting that their thoughts on Unilever are very much in line with my own.

Will be fascinating to hear what the bank is that has finally interested Smith enough to make an investment. If he does so, of course. He was a bit of a tease about that prospect.

Yes, bit of a shock hearing they have found a bank that is under consideration. Can’t be many candidates. I’d guess JP Morgan might have the kind of return on equity required.

simoan wrote:

BullDog wrote:Will be fascinating to hear what the bank is that has finally interested Smith enough to make an investment. If he does so, of course. He was a bit of a tease about that prospect.

Yes, bit of a shock hearing they have found a bank that is under consideration. Can’t be many candidates. I’d guess JP Morgan might have the kind of return on equity required.

JPM is the obvious one although this is late to be getting in on that.

Buffett has been interested in Japanese banks and trading houses of late.

Lootman wrote:

simoan wrote:Yes, bit of a shock hearing they have found a bank that is under consideration. Can’t be many candidates. I’d guess JP Morgan might have the kind of return on equity required.

JPM is the obvious one although this is late to be getting in on that.

Buffett has been interested in Japanese banks and trading houses of late.

They don’t time the market though. Valuation of JPM looks fine to me for a huge bank with an average ROE of 15%. Ultimately, with any bank you’re generally investing in the domestic economy and so that would favour the US IMO. Only other options with high enough returns on equity and investable economies would probably be Canada or Scandinavia.

It’s fashionable to knock Smith and Fundsmith, but I can’t fault his philosophy or his conviction. I am still backing it as a long hold.

I am also in Alliance Trust, which has done really well over the last 12 months….but it has nearly 200 holdings v Smiths 29 and its investment strategy is Uber complex with the fund manager sub contracting to 7 different stock selectors or so.

I thought his slides on the magnificent 7 and previous incarnations was illuminating, as were the slides on AI and previous tech leaders (amazingly I met someone recently who can’t let go of his Blackbery).

Maybe Julian Robins view of Unilever will sprinkle some sparkle into my poorly performing UK equity funds.

Smith is not the most likeable person, probably a big ego, but more power to his elbow for his beautifully simple model based on fundamentals, not fads,fashions or faith.

AndrewInDevon wrote:It’s fashionable to knock Smith and Fundsmith, but I can’t fault his philosophy or his conviction. I am still backing it as a long hold.

I am also in Alliance Trust, which has done really well over the last 12 months….but it has nearly 200 holdings v Smiths 29 and its investment strategy is Uber complex with the fund manager sub contracting to 7 different stock selectors or so.

I thought his slides on the magnificent 7 and previous incarnations was illuminating, as were the slides on AI and previous tech leaders (amazingly I met someone recently who can’t let go of his Blackbery).

Maybe Julian Robins view of Unilever will sprinkle some sparkle into my poorly performing UK equity funds.

Smith is not the most likeable person, probably a big ego, but more power to his elbow for his beautifully simple model based on fundamentals, not fads,fashions or faith.

Quite agree. Nobody's perfect. Smith was very unfortunate to sell Adobe and Amazon based on announcements by the executives at both companies that in the end never happened. I don't know how you can really get away from things like that happening.

BullDog wrote:

AndrewInDevon wrote:It’s fashionable to knock Smith and Fundsmith, but I can’t fault his philosophy or his conviction. I am still backing it as a long hold.

I am also in Alliance Trust, which has done really well over the last 12 months….but it has nearly 200 holdings v Smiths 29 and its investment strategy is Uber complex with the fund manager sub contracting to 7 different stock selectors or so.

I thought his slides on the magnificent 7 and previous incarnations was illuminating, as were the slides on AI and previous tech leaders (amazingly I met someone recently who can’t let go of his Blackbery).

Maybe Julian Robins view of Unilever will sprinkle some sparkle into my poorly performing UK equity funds.

Smith is not the most likeable person, probably a big ego, but more power to his elbow for his beautifully simple model based on fundamentals, not fads,fashions or faith.

Quite agree. Nobody's perfect. Smith was very unfortunate to sell Adobe and Amazon based on announcements by the executives at both companies that in the end never happened. I don't know how you can really get away from things like that happening.

The point is you can’t. No-one can and Fundsmith are no different - it’s just one of those things you need to live with as an investor. As long as you make more right calls than wrong ones you’ll make good money in the long run.

Personally, I didn’t buy all the answers to the questions during the Q&A. In particular the question about being fully invested 100% of the time. It’s not right to show the effect on performance of missing the biggest one day market increases and totally ignore missing the biggest down days. That’s too biased for my taste. Some of the other answers irritated me a little too. Worth watching though.

The missteps that Fundsmith has made over recent years coincide with Terry Smith's unfortunate and nasty split with his partner of 15 years. Was it John Tudor-Jones said that he sells immediately on hearing of a fund manager's divorce?

I was also irritated by quite of lot of what he said and the slide at the end with Charlie Munger was not too clever, in my view.

I still think that Fundsmith will out perform the market. Fortinet looks like a solid buy, but nowhere near as good as Adyen to date. His reasons for not buying looked ill informed and I'm pretty sure that Julian 'We may yet buy Adyen' was not entirely in agreement.

The portfolio is solid and although the nimbleness with which the few trades were done before seems to have deserted them, I think lessons have been learned.

Two last points. All the ASM videos from previous years have been taken down from their site and YouTube. Is paranoia setting in? Fees are too high and if underperformance continues, there'll be a big outflow of funds. Probably at just about the same time as performance improves.

The Charlie Munger slide thing was cringeworthy!

I see Morningstar has down rated Fundsmith from Gold to Silver on the basis of his recent mis-steps in selling.

simoan wrote:They don’t time the market though. Valuation of JPM looks fine to me for a huge bank with an average ROE of 15%. Ultimately, with any bank you’re generally investing in the domestic economy and so that would favour the US IMO. Only other options with high enough returns on equity and investable economies would probably be Canada or Scandinavia.

A bit late in posting this, but I've just got back from our monthly afternoon session on the beer aka "Last of the Summer Wine" (at 60 I'm young enough to be every other member's son), and Fundsmith and banks cropped up in conversation.

My vote was for Canadian banks, not American and to avoid British banks as if they gave investors AIDS. The last time any of the big Canadian banks cut or suspended their dividends was 1940 (link below). In comparison British banks are a joke.

https://www.financialpost.com/investing/why-canadas-big-banks-defend-dividends-in-coronavirus-market-rout-and-at-all-other-times

SalvorHardin wrote:

simoan wrote:They don’t time the market though. Valuation of JPM looks fine to me for a huge bank with an average ROE of 15%. Ultimately, with any bank you’re generally investing in the domestic economy and so that would favour the US IMO. Only other options with high enough returns on equity and investable economies would probably be Canada or Scandinavia.

A bit late in posting this, but I've just got back from our monthly afternoon session on the beer aka "Last of the Summer Wine" (at 60 I'm young enough to be every other member's son), and Fundsmith and banks cropped up in conversation.

My vote was for Canadian banks, not American and to avoid British banks as if they gave investors AIDS. The last time any of the big Canadian banks cut or suspended their dividends was 1940 (link below). In comparison British banks are a joke.

https://www.financialpost.com/investing/why-canadas-big-banks-defend-dividends-in-coronavirus-market-rout-and-at-all-other-times

JP Morgan is the world-class bank in my view. It seems to flourish during bad times as it is able to buy up failing banks for a song, most obviously during the GFC when it hoovered up Bear Stearns and Washington Mutual. More recently it bought First Republic Bank, which was a class act that got into trouble. My JPM position has quadrupled since I bought it whilst other banks have done little.

I don't know much about Canadian banks but they seem to be safe, strong and stable. Like you I would not touch a UK bank, but then I barely own any UK shares.

SalvorHardin wrote:

simoan wrote:They don’t time the market though. Valuation of JPM looks fine to me for a huge bank with an average ROE of 15%. Ultimately, with any bank you’re generally investing in the domestic economy and so that would favour the US IMO. Only other options with high enough returns on equity and investable economies would probably be Canada or Scandinavia.

A bit late in posting this, but I've just got back from our monthly afternoon session on the beer aka "Last of the Summer Wine" (at 60 I'm young enough to be every other member's son), and Fundsmith and banks cropped up in conversation.

My vote was for Canadian banks, not American and to avoid British banks as if they gave investors AIDS. The last time any of the big Canadian banks cut or suspended their dividends was 1940 (link below). In comparison British banks are a joke.

https://www.financialpost.com/investing/why-canadas-big-banks-defend-dividends-in-coronavirus-market-rout-and-at-all-other-times

I think it's fair to say that Fundsmith would be looking for top quality, profitable banks i.e. with high returns on equity. If you look at 5 year average ROE amongst the largest banks the top two are National Bank of Canada and Royal Bank of Canada with average ROE > 15%. JPM is third but has the scale and liquidity that Fundsmith would be looking for, and then there are a couple of Swedish banks. It seems bizarre to be mentioning Fundsmith and banks in the same sentence and I suspect Terry Smith's tongue was firmly in his cheek when he said he had found an investable bank. Although what is a bank these days? It could easily be a large fintech with a banking license he is looking at.

Lootman wrote:

SalvorHardin wrote:A bit late in posting this, but I've just got back from our monthly afternoon session on the beer aka "Last of the Summer Wine" (at 60 I'm young enough to be every other member's son), and Fundsmith and banks cropped up in conversation.

My vote was for Canadian banks, not American and to avoid British banks as if they gave investors AIDS. The last time any of the big Canadian banks cut or suspended their dividends was 1940 (link below). In comparison British banks are a joke.

https://www.financialpost.com/investing/why-canadas-big-banks-defend-dividends-in-coronavirus-market-rout-and-at-all-other-times

JP Morgan is the world-class bank in my view. It seems to flourish during bad times as it is able to buy up failing banks for a song, most obviously during the GFC when it hoovered up Bear Stearns and Washington Mutual. More recently it bought First Republic Bank, which was a class act that got into trouble. My JPM position has quadrupled since I bought it whilst other banks have done little.

I don't know much about Canadian banks but they seem to be safe, strong and stable. Like you I would not touch a UK bank, but then I barely own any UK shares.

Interesting. I have just watched Simon Gergel doing his prentation thing on Merchants Trust. He is pushing UK value. I recently watched an interview with Bruce Stout who is retiring from Murray International. I think he has done a good job there, all things considered, and stuck with his fund mantra. He believes the UK is a value trap. I have to agree. Just too many gremlins.