저자: TerrySmith · 외국인
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2018년 12월 31일 기준 펀드 포트폴리오 성과 상위·하위 5개 종목과 2018년 운용 결과를 정리한 발표다. 결론: 좋은 기업을 고르고, 적정가보다 비싸게 사지 않고, 가능한 한 아무것도 하지 않는 단순 전략을 유지한다는 것이 핵심 메시지다. 상위 기여 종목으로 마이크로소프트(4년 연속 상위권), 아이덱스(Idexx), 인슈어런스 관련 회계 소프트웨어 기업, 페이팔, 닥터페퍼 스내플(인수로 편입 종료)이 언급됐다. 마이크로소프트에 대해서는 이익 실현이 필수는 아니라는 점을 강조했다. 하위 기여 종목은 필립모리스 인터내셔널로, 전자담배·가열담배 등 흡연 산업 교란에 대한 우려로 부진했다. 운용 방식: 기업 경영진과의 대화 사례로 세이지(Sage) 최고경영자 교체 과정에 이사회·의장·보상위원회와 소통한 내용을 들었다. 행동주의 투자자 대응에 대한 과거 서한도 언급했다. 좋은 기업 기준 지표(포트폴리오 편입 기업 기준): 투하자본이익률 약 29%, 매출총이익률 약 65%(지수 약 40%), 영업이익률 약 28%, 현금 전환율 약 100%, 부채비율 약 46%(지수와 유사), 이자보상배율 약 17배(지수 약 2배 수준). 잉여현금흐름 수익률은 약 4%로, 펀드가 FTSE100(5.2%), S&P500(4.7%)보다 약 14~15% 비싸다고 인정했으나 지표 품질 차이가 그보다 훨씬 크다고 주장했다. 거래 현황: 연간 회전율은 약 13.9%로 2017년보다 높았고, 거래 비용은 약 0.02%다. 2018년 매도: 닥터페퍼 스내플(Keurig 인수 관련 지분 정리), 네슬레(행동주의 투자자 영향으로 전략 불신), 콜게이트 팜올리브(비중 1%로 축소 후 정리). 신규 매수: 맥코믹(McCormick), 코플라스트(Coloplast), 페이스북. 베리언 인수로 편입된 C.R. Bard 대체 성격도 언급됐다. 페이스북 매수는 마이크로소프트 매수 시기와 유사하다는 비교를 했다. 출연자 전망: 특정 종목 가격 방향에 대한 1~3개월 예측은 없고, 장기 투자 관점만 밝혔다. 리스크: 경영 전략 실패(가격 인상 위주 성장의 위험), 흡연 산업 규제·기술 변화, 무리한 인수 및 현금흐름 악화 가능성, 고평가 시장에서의 밸류에이션 부담이 언급됐다.
다듬은 글
we can never get better than that in our view what worked and what didn't work last year in terms of contributors those are the top five contributors to our funds performance and the top five detractors I won't go through all of them for you but I've just made some mentions Microsoft is making its fourth appearance in that table that's I think interesting for a couple of reasons one is I happen to know that one of the questions Jeff is going to ask us a question on because so many people did ask questions is Facebook there are in our view quite a lot of parallels between when we bought Microsoft them and our purchase of Facebook the fact that it's been in our table four times so for annual appearances seems to me to query one of the great axioms of investment that basically the secret to profiting in investment is to take profits would appear not where Microsoft is concerned I think it was a Rothschild who's alleged to have said that nobody ever got poor by taking profits I think that's literally true but I doubt whether they got rich either in my view of it idec's is a veterinary Diagnostics equipment manufacturer that's making its second appearance in our table so I would say very similar things about you know you make money with old friends in my view things that you you've proven that you understand by the success that they've had insurer is a us-based accounting business PayPal is an online payments business Dr Pepper Snapple I haven't checked but I think he's making it third or fourth appearance in the top five it won't be making any more appearances because it's been taken over so that was its final appearance at least for the time being and that's the spun out again in due course and over on the riot the detractors Philip Morris International our one remaining tobacco stock was a poor performer last year it was caught up in the noise around disruption of the smoking industry with vaping and heat not burn so-called reduce risk products so the noise around that was quite big saij if any of you read the annual letter that I write each year you will see that apart from telling you what we've done I usually try now I'm write up some topic outside that to explain what what we actually do for you from time to time apart from just at there and you know buy and sell things a year ago I wrote up how we reacted to activists involved in our companies this last year I wrote up how we engage with company management's people quite often artists do you engage the company much how do you engage with company mansions her biggest engagement last year was with sage the uk-based accounting software business which managed to part company with his chief executive in the middlee we were engaged with talking to the board about the performance of the business before he left we didn't ask for them to to get rid of him but we were engaged with talking about the issues in the company for we engaged with the the chairman after it had occurred to try and influence the decision on what would happen next and we've engaged with the chief executive since he got in and with the remuneration committee about what the stretch is gonna be next so that was there's nothing particularly new to say about the 3m corporation or novo nordisk but this gives you a flavor of things that worked and things that didn't work last year hopefully by now you'll be familiar with our strategy which is very simple we try to only invest in good companies we try not to overpay for their shares and then we try to do nothing and I think it's as well first of all to always repeat that so that we we all understand what it is we're trying to do here and how we're trying to do it one of the things we find when we meet clients to talk about how we manage their money one of the things increasingly we do hear from them is they like the fact that we actually do what we said we're going to do I have no idea what their other fund managers do I do because I was a broker once a graphically but they particularly like in periods like October and December last year they don't suddenly find there's a change of strategy to try and deal with some thing that's happened in the market we are sending out our strategy and we intend to pursue it to the best of our ability just to go through to those very briefly for you only investing good companies there's a table that we publish every year now and it's a look through so if we take all the companies out portfolio and we calculate those six operating measures that you can see on the left-hand side there are ocl return on capital employed gross profit margin difference between revenues and the cost of goods sold operating profit margin after all Pence's cash conversion what percentage the profits arriving cash leverage how much debt do they use an interest cover how safe is their cover for their their interest and lease payments and we compare them over time and we compare them with the two main indices that we that we look at and you can see that on the major measures that we look at our company's a don't vary very much and B they are much better than the index so if you take the return on capital employed you can see the last year was 29% it's varied a little around the period but not a great deal and it's getting on for twice the average of the footsie or the S&P 500 basically that in our view is the single biggest measure of whether or not you've got a good business what's the return on capital employed we look at the gross margin not a lot of people do look at the gross margin so companies taking stuff or services so they take in labor and they take in components and ingredients and they turn them into products or services they sell to their clients they make a markup between those two things otherwise they're not in business at all they're in a charity and our company's had a gross margin last year of 65 percent you can see it's always been around the 60s the index is about 40 percent as I always say to put it in English our companies make things for for and sell them for 10 whereas companies an index makes things for 6 and sell them for 10 one is clearly better than the other okay then outcome all of the other expenses of businesses so their expenditure on product development R&D sales general and administration expenses and you get down to the margin that most people commonly quote what's your trading profit margin where you can see our company's lastly with 28% index about fifteen or sixteen cents or twice as good trash conversion what percentage of profits arrive in cash not all profits arrive in cash our companies as you can see pretty consistently convert about a hundred percent of profits into cash slightly down last year and leverage I wrote about this in the letter it looks like the leverages ticked up on our companies to 46% and it's about the same as index if I was going to drop one number from this table it would be that one it's the it's an average between some wildly different figures and therefore verging on the meaningless we have no income with net cash in this calculation we have one company has two thousand percent gearing on this measure because it doesn't have any capital it's great it's a tremendous business it uses other people's capital because it's a franchising business and so the the average is relatively meaningless this is a better measure Interest cover so but on their on that debt they've got to pay interest on their leases they've got to pay rents how much cover have they got throw their their profits for that you can see our companies have got 17 times cover versus about half hour on the index so look there aren't very many things that I could promise you even if I wasn't under various legal constraints about what I'm allowed to promise but even if I were actually free there's probably only about one that I would actually know my colours to the mast on we own good companies that's the one I would stick to don't overpay it's not ii accidentally in our view the long term performance that you get from companies is galton by whether or not they're good companies producing those fantastic financial returns far more than it is by whether you buy them cheaply or not strangely people spend a scene spend most of their time on worrying about the cheap bit and not very much about whether or the companies are any good we could never understand that personally but there we are so where are we we use a measure called free cash flow you how much cash the companies generate off they paid for everything except the dividend number divided by the market value with the company chose you the free cash flow you that's that cash is ours that belongs to us the shoulders about half of it is paid out to us in dividends and share buybacks the other half is retained and reinvested in the business and probably the great unsung miracle of equities which is absolutely unique to them as an asset class is they are the only asset that you can invest in where part of your return is automatically reinvested for you doesn't have with properties it doesn't have with bonds it does happen with equities and if they are good companies that produces a phenomenal result basically as you can see last year the free cash flow yeren our companies was 4% that was up a bit it was about 3.7 percent the year before so our companies have become less expensive during the year in fact this is not that surprising because the free cash flow is the thing that we're measuring here went up by 8% as you can see there and as you saw earlier od went up by two percent so our company's free cash flows arise I've spent a year rising faster than the share prices have that's bound to happen from time to time it's very healthy but it happens from time to time mm-hmm we can't have a world in which the share price always rises faster than the free cash flow it's bound to come to an end you can see that we're more expensive than the footsy which has got a 5.2 percent free cash flow you or the SP which got a 4.7 percent free cash flow yield and I would ignore the footsie number I put it in for completeness I wouldn't like you to think that we're hiding anything from you I think it's actually a non valid comparison sadly the footsy has an awful lot of and I can't think of a better technical term than rubbish here stuff which has got high free cash flow yields and which you own at your peril in terms of whether or not you're ever going to make money from it exactly and the SSP is a better comparison and as you can see if you took for compared with four points there we're about fourteen or fifteen percent more expensive than that index if you think back to that last table that I showed you we are not fourteen or fifteen percent better every number of any significance in that table is a very very significant order of magnitude better you know things are not cheap or expensive they're only cheaper expensive relative to other things and you have to work out what you're paying for otherwise it's not going to buy a car and just judging it on price and of course the price might vary between different makes and you have to think about what is it I'm getting do nothing our third premise we try to do nothing for two reasons the one thing is it costs money to do things with transactions cost money it's a drag to the performance of our fund if we if we do a lot of dealing and secondly it minimizes mistakes once we've assembled a portfolio very good companies sometimes the few of the little less tinkering we do the better in many respects with it if you look you see that last year was actually our busiest year so fast so we turned over thirteen point nine percent of the portfolio rose you can see if you look back it was much lower than that it's about highest compared to a number last year of five point four a technical explanation that's a bit of a misleading calculation insofar as if you looked at the table for the last six years you would see in three of the six we had negative turnover what does that mean it's a calculation that we're given we don't this calculation on the basis we would like to do it we told how to do it and if you have net cash buildup in your portfolio through inflows during a period and they exceed the amount of deal you do you have negative turnover because you haven't turned over as much as the cash that came in we had the opposite last year we ran down the cash in our portfolio - throughout the year because we had the incidence in October and December where we deployed the inflows and cash in our fund so in fact if you if you X that out you'd come to about 10% to know still a bit higher than usual but not exactly life-threatening I would say still a lot lower than other fund managers I'll go on to show you that comparison in a moment and if you look at how much we actually spend if you get to the very bottom there you can see that we spent point zero two percent two hundredths of a percent on dealing I'll show you what other people spend on dealing in a moment if I may now if you are paying the 1% annual management charge teaglass which I am and I imagine most if not all of you are and you took look at the expenses that we add to the fund it gets you to one point zero five percent and you can see we spent another four bits on all forms of dealing that's transaction costs taxes spread the works we buy the stands of the industry are still glacial in terms of dealing what do we actually do during the period now do nothing it says we sold Dr Pepper Snapple that's literally true but actually was bid for by Keurig Green Mountain we mostly received cash we only had a very small residual stake left for the Keurig Green Mountain business and we didn't believe the strategy so we decided you know the alternative would have been to a lot of Keurig Green Mountain to take our stake back up we decided a better option was to sell it we also sold our stake in Nestle Nestle's got an activist on board which we wrote about a year ago in our annual letter who's got a Nestle to react to him by doing various things like committing to margin targets committing to share buybacks and although he didn't explicitly ask for this they bought these Starbucks brands that Starbucks cells outside his shops and in supermarkets bags of coffee basically not that we're ready to drink stuff that's already owned by PepsiCo but bags of coffee they paid 14 times revenues for that business I believe and they're also paying a perpetual royalty to Starbucks for it when you give us your money your sub Contracting the management of some of your capital to us when we invest in companies we're subcontracting it to them when they start doing things that we think are injurious obviously we try to prevent them doing things that are injurious they don't often listen to us and the only thing we can really do then is take our money away and so that's what we did on the other side we bought coloplast we bought that quite early on in the year that's a Danish medical devices company it's the world leader in catheters things are used in well I'm going to what they're used in case you can read later they're going out to dinner ops they used a lot of things in human bodies and we used to own their nearest competitor CR bard but that was taken over as well so this is if you'd like in replacement sail bar we bought Facebook I know Jeff is going to ask me a question he's already told me he had so many that he was going to ask a question about Facebook so I won't dwell on Facebook right now I'll leave that for our session if that's okay Jeff for you to do it and we bought one new position which we've now revealed just is McCormack which is an American fast moving consumer goods company in the food industry it makes McCormack and Schwartz spices you've got some of their products in your food cabinet at home if you go into any fast food or casual dining restaurant and consume anything in there you will be consuming something in in there it's got the highest return on capital of any food company that we follow it's made a very good job in my view or our view of the acquisition of the food businesses record anchors of their book which was Frank's redhot sauce and French's mustard and so we've started initiated a new position in McCormack we've just recently sold our Colgate Palmolive it's a very small position to us we hadn't added to it for a long time it was down to 1% of the fund in the end you have to make a decision but these things occupy that do you want to go and buy a lot more and make it meaningful because after all you know something really good happen if you only got 1% it won't do our front a little good or do you want to sell it we took the decision to sell it on the basis that we think that the management strategy to date has been a dangerous one that we've seen go wrong elsewhere which is basically to grow revenues by product singly putting up prices we like people who grow volumes as well we think it's dangerous if you just put up prices we've seen this in things like factoring Goliath and Campbell in soup that is never ending well so we saw them talking
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