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welcome back to another video I hope you're having a wonderful day so in today's video we're looking at Terry Smith Terry Smith is a fund manager he's based in the United Kingdom he is a super investor he manages a lot of money and one thing I like about this guy is he has a very simple strategy so what I would like to do today is look at his strategy and look give you five companies that are Sharia are compliant that I in his portfolio and then I'm going to share with you guys the rest of the portfolio the reason I like to do these guys basically look at these invest and we're super invested it is because their strategy like we are new to investing they we don't have a lot of money these guys manage a lot of money and they try to find the Quality Companies and that's his strategy find Quality Companies and so on so what I'm going to do first is basically give you his strategy and talk about that and then after that we will look at the five stocks and then after that I'm going to show you his entire portfolio and we will look at some of this real compliance within the 15 or 20 whatever okay but before we do that as always please give the videos a like it actually takes a lot of time in fact I recorded this video yesterday night and then I was about to post it this morning I'll be an edited this morning and then I realized the sound was absolutely terrible this is what I think it might be better but um it might not be perfect so I apologize if it's actually all over the place I'm trying to figure out what's wrong with the mic I think it's something to do with the computer or the mic I'm gonna figure out today anyway I'll fix it but yeah it takes a lot of time I'll be honest with you to do this research and so on so it'd be really nice if you can just give the video a like it doesn't cost you anything and something that cost you a little bit is the fact that you can potentially um join us on the patreon account okay where you get access to all of these things all the trackers that we have and the Sharia comply and invest in ebook and so on um so yeah that really helps the channel so if you can do that that would be really nice okay Terry Smith is this guy he's basically from the basic United Kingdom he has a fun Smith um basically a company called fundsmith he actually manages it quite a lot of money so what I want to do now is go over his strategy first so his strategy is very simple he says investors should have a high quality concentrated portfolio of 20 to 30 resilient Global growth companies which are held for the long term absolutely amazing okay that's what I'm trying to do find high quality companies 20 to 30 different companies okay Global growth companies mine maybe it's not Global but it is mainly focused in the US and so on and held it for the long term and that's something I'm trying to do and this is something that's really difficult okay especially if you're new investor and you find a company and before you now it goes down two three four percent it's hard to keep that company and keep going and keep adding to it so it that the long term is the really the hardest that psychology of just forgetting about you and buy and forget is actually very hard three things that he talks about very very simple buy good companies and he has his basically metrics that he uses to buy good companies so one of those things is basically I'm looking at what is called return on invested capital and so on he says don't overpay and this is really important to us because there are so many companies out there for example the nvidias and so on you will see it going up three four five percent every single day and you want to like you think okay you know what I'm gonna buy this company regardless of what is trading right now how inexpensive it is a lot of us will jump on the bandwagon on the later on lose a lot of money so don't overpay because you sometimes you're never gonna get that money I've had companies that I bought when they're really expensive and I lost quite a bit of money I bought companies with when they were really cheap and made lots of money so it is important to think about that okay and do nothing and that's again going back to the long term do absolutely nothing this doesn't mean basically don't do completely anything at all and but it is important to to ignore the noise don't follow that if you want to rebalance your portfolio and things like that that's fine if there's a stock that you no longer believe is going to be basically the what you want and so on then get rid of it do those things okay but when it comes to the noise and the stock market is going down and is this going to be recession it's going to don't listen to the news do nothing don't worry about these things okay a couple of more things that he talks about talks about basically buying and investing in a business with the tangible assets okay companies that we normally know the companies that we that have a product that we can touch and feel and we know what it is okay um invest in a business with a growth potential obviously okay we want to buy companies that has a growth potential that grow in their revenue if a company is not growing their revenues if they're not growing their cash flows for example okay and that's not gonna good be good for us because what you want to end up doing is buy a quality company they make money by basically selling products and services some of that money then goes into their cash flow that cash flow then is used to pay you dividends to buy back their own shares to reinvest in the business to pay off debt and so on so it is really important invest in a business that requires no significant leverage to generate Returns the company are not running to the bank every time they want to basically grow the business okay they basically don't want to get capital from the um the bank they grow organically they use their own money they use their own cash and that's important and he says avoid businesses that are vulnerable to Technology Innovation again there are a lot of companies that lost business completely because some guy came up with a software that allows them to do what they were supposed to do for whatever and completely wipe that company out of the basically this world okay and finally invest for the long term and that is simple so he has those simple things that actually makes sense and this is the reason I like because I like simple things I don't want to over complicate that's why I use Simple metrics when I actually basically talk about final basically fundamental of fundamentals of a business and so on so make it simple okay buy Quality Companies okay don't overpay and hold them for the long time if you could do that then he says you'll be successful now let's have a look at the five companies that he owns in his portfolio then I'm going to show you the entire Port entire in his entire portfolio and the first company he has is company called idexx core corporations and this company basically has a market cap of 116.5 billion so it's a small company it has a narrow economic model and prices right now 219 dollars per share it doesn't pay dividends one point three and one six different payout ratio is only 29 and latest increase was about seven percent The Five-Year growth rate of 10 they have increased this dividend for just two years so they are still quite new in terms of dividend side of things increasing dividends okay I know payouts 2.56 safety ninety five percent this comes from SimpliSafe dividend profit margin was about 18 return or Equity about 19 return on invested capital is actually 13.8 this is something that he looks for all the time and can return on invested Capital it's very important to um Terry Smith now free cash flow we're looking about five um just about five million uh 500 million and the reason is because is the the company is actually quite small companies so that's not bad at all and total routine we're looking at for the last 10 years we're looking about 15 next year they're expecting nine percent growth and then 12 percent after that is one percent discount based and at the time of recording 217 dollars per share is where the price should be in the long run okay now MasterCard is the next one 370 billion market cap wide economic mode okay by the way before I move on MasterCard and Visa both companies are not um are basically sure are compliant they are not Banks okay they don't deal with anything like that their job is to make sure that transaction happens there are the technology behind the cards that we have they have don't deal with any of the transactions basically they don't take um they don't basically charge a river or anything like that interest and so on they are poorly like company that works behind the scenes that facilitated facilitates the transactions if you like as you can see they have a very small dividend okay payout ratio is only 20 latest increase of 16 five you growth rate 18 dividend streak of 11 years 2.28 is what you will get safety is 99 which is the highest you can get profit margin of 43 return on Equity of 174 return on invested Capital maybe this is why he's investing in this company is actually 15 one percent free cash flow five billion dollars totals ten twenty percent in the last 10 years next year they're expecting the earnings to grow about 20 then 17 every single year after that it's about basically right now with one percent discounted at the time of recording 389 dollars per share is where the price is next one is Visa he owns both of them which is very interesting 483 billion dollars very similar in terms of basically where the company is also dividends very very similar the growth payout ratio is actually quite similar the latest increases about 20 of the Visa has got that upper hand when it comes to that the five-year growth rate 18 both of them and visas actually paid increase that dividend 14 years and they pay slightly less 1.80 per share now in terms of safety is also 99 and profit margin 51 return on equal to 45 and return on invested capital is actually 228 free cash flow we're looking about 18 billion dollars choose quite a lot 2010 in the last 10 years we're looking about 19 next year they're expecting the earnings to grow this comes from the Yahoo analyst so they're expecting the earnings to grow about 19 and 13 and a half percent then about 13 and a half percent almost every single year for the following five years is about two percent discount right now 241 dollars per share is where the price should be next one is Procter Gamble and this is a company that he bought heavily this um quarter so we will I'll show you that in a second but as you know come this company is one of the biggest companies out there 359 billion dollar market cap it has wide economic mode 152 dollars per share right now dividend yield of 2.407 almost 2.5 pay at ratio 62 so this is bit high for my liking what basic basically this means is the um 62 but they're using 62 of their net income to pay us these dividends so this list is a little bit high but I'm hoping that in the next few quarters that they can bring that down latest increase about three percent uh five you growth rate of six percent dividend streak of sixty seven percent so look at this they have increased their dividend for 67 67 years sorry okay 67 years in a row there was recessions the war this that they didn't care they have increased it every single year and this is why I like this type of business they are very predictable they study at economic business they have been increasing the dividends for a long time they you could rely on that dividend okay um but yeah so 3.76 is basically what they will give you for every share of this company you own a 99 safety profit margin of 17.5 return on Equity 32 return on invested Capital 18 13 billion dollars in basically in the bank right now Total return in the last 10 years is about basically nine percent next year they're expecting the earnings to grow eight percent six percent after that it's 12 premium right now 136 dollars per share is where the price is at next one is a company also own that is an automatic data processing 103 billion dollar market cap it has a wide economic 251 dollars per share right now the dividend is just below one two percent sorry 58 um when it comes to payout ratio latest increase was 20 which is absolutely huge five year growth rate of 14 dividend streak of 49 so this means this company will become dividend Kings if they increase it one more year that dividend kings are companies that have increased their dividend uh 50 years plus and dividend Aristocrats are 25 years above above and different contenders I think they call these days um they are companies that are 10 plus years annual payout we're looking about five dollars for every share of this company that you own safety is 97 profit margin almost 19 return rate with 106 percent return on invested Capital 53 and free cash flow looking at 3.64 basil total returning basically in the last 10 years we're looking about 15 next year they're expecting the earnings to grow 10 then 14 after that three percent premium right now 244 dollars per share I'm hoping the way the market is going right now we we might see a drop in this um in the next couple of weeks or so um it looks like we're getting to like a bearish kind of market so I'm expecting this maybe the little bit of a pullback from this company hopefully then I can add a few more shares now that's the five companies I wanted to share with you guys and all of them actually are compliant so as you can see here there are no issues when it comes to shred completely compose the video and have a look at that now let's have a look at his portfolio entire portfolio so you can see here is actually the Q2 which is basically the recent report they've done they have actually added more so this is the terrorismit fund um on the transmit okay so they added more of Procter Gamble they had they had they added more MasterCard they added this as well as what else they have a Visa okay and a few other companies I was interested it was interesting to see they've actually added to Striker because I thought strike was really expensive and product and gamble I'll be honest with you but product double is probably cheaper than striking strike has been strike is very similar to medtronics they sell um basically the uh medical equipment so but as you can see here there is they've reduced a little bit of each one of these companies so alphabet and I don't blame him because these companies have gone up quite a bit Microsoft has gone up with um meta has gone up quite a bit Pepsi has gone up quite a bit as well Nike and he's even introduced basically reduce automatic data processing and so on so he's just sold a tiny bit of these companies and bought more of these companies here which is very interesting and if you wanted to check I'll put this on the links um in the description section so you can have a look at that this company is interested in it's actually gone down quite a bit so I'm not sure why he probably bought a long long time ago and it's still up quite a bit but he took some profit I think over there but let me have a look at the striker because I'm interested in Striker look yeah 28 premium according to Morningstar and according to Seeking Alpha it's about 13 upside according to the Wall Street but see Seeking Alpha analysts are saying basically it's not a buy right now it's a hold cons is actually also seen as a halt so valuation is very rich when it comes to that company but there you have it that is the five companies I wanted to share with you guys that it's the strategy of this guy that I wanted to share with you guys is really important just to like look at this and just think about this okay buy good companies don't overpay do nothing hold on to your investment and leave it just to be transparent okay I don't own automatically data processing there by 13 shares and what else do I own I own companies like Microsoft that I've just mentioned I've talked about Nike a little bit but product gamma is one of those companies that we looked at I do own that one um and whilst do I own I think that's a Visa okay that's basically the three companies that I own that we talked about today in more details I hope you're having a wonderful day if you're still here give the video videos a like subscribe to the channel let me know if you have any questions and definitely join us in the Discord it really really genuinely helps the channel have a wonderful day assalamualaikum
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