저자: TerrySmith간접분석—출연자Steve/진행자 · 외국인
요약 보기
테리 스미스 Fundsmith 펀드가 최근 6개월 약 -1.9%로 부진, 노보 노디스크와 콜갈이 성과 저하 주원인으로 지목됨. 펀드는 Zoetis, Exponent 등 신규 매수, 펩시·브라운포먼·Diageo 매도. 최대 보유 Meta(9.4%)와 Microsoft(7%+)가 AI 데이터센터에 대규모 투자하며 자본경량 철학과 충돌한다는 지적. 진행자들은 펀드 미래 성과에 회의적.
다듬은 글
Terry Smith is a stuff that's been happening. We'll get ourselves started with that one, shall we? So, we've talked about the Brit Box and the Euro Box recently, and we've talked about our own portfolio. So, now it's time to start talking about other people. And one of those people is Terry Smith. Uh he's released his letter to Fundsmith shareholders for the last six months or the kind of first six months of this year.
Um and is down about 1.9 uh% over the six month. I say he's down, he's not down. I mean, he's collecting fees from this thing, but the people who own the shares are down. Uh, importantly, 1.9% on their uh investment over the first six months, he charges at about 1% a year, I think, which is sort of actually reasonably high for a fund that has just underperformed recently a little bit.
Long-term performance is still very, very good compared to the thing that he indexes against, which is the VWRL. I tried to check it against the S&P 500, and he is above that since inception. Not by as much as he's above the VWRL, but um he is still outperforming. So still the man, but right now less the man uh than he has been in recent years, I guess it's fair to say.
So uh the main thing that's been dragging his performance lower is Novo Nordisk. And we've talked about this a fair bit on the show recently because it's been dragging our performance in the Euro box as well. uh it unlike us. Um well, Smith says that basically the the decline in Novo compi combined with the size of um attribution his portfolio previously had to it pretty much if you add that and Collast, which is a kind of Danish plaster conglomerate, I think um as in sticking plaster, not uh plastering plaster uh conglomerate, between them, those two things basically account for all of the underperformance, which is one way of putting it, I guess.
I'm not a huge fan of that way of thinking. I mean, I think your underperformance is a function of all the other stuff you had that underperformed as well. Uh, the stuff that didn't go up um as much as BWRP did, but uh that's his way of thinking about it and thinking, well, if I hadn't been so massively committed to Novo Nordisk and Collast, then we wouldn't be um underperforming here.
And Novo Nordisk has gone from his um portfolio. He spoke very positively about it not terribly long ago, but he sees them as now clearly losing in the race for GLP-1 supremacy to Eli Liy. It's GLP1s are a theme that Terry Smith is quite big on. He's also been selling over the past however long. His stake in Pepsi, his stake in Brown Foreman, his stake in Dagio, and all these companies that he sees as kind of casualties of people eating and drinking less.
and maybe correctly uh to be honest, but he's now also seeing Novo Nordisk as a casualty of Eli Liy being better at um stopping people from eating and drinking less. And there might be some merit uh to that thought. I mean, I know you sold it recently as well, Steve. So, um I would say you're in good company, but you're at least in the same company as Terry Smith anyway.
So, we will um come back to that one in a moment. I guess the big question everyone has is what he's been buying. Uh and he's been buying three things as far as I can see. One is Zoetis which is a animal medicine company based in the states. I always used to muddle this up with a company called Zomemedica which is also an animal kind of medicine company in the states and very very different one in that Zomemedica is a crappy meme stock.
Basically it went up 270% once because Carol Baskin um I'll just give you a moment Steve to remember where you know the name Carol Baskin from. Oh no you don't need a moment Steve. Carol Baskin is one of the objectionable people in Tiger King, which is another way of saying that she's one of the characters in Tiger King.
Um, and she for some time gave a kind of advertising plug, I think, for in a way that celebrities do for money. Nothing the matter with that for um Zometica. They have, as far as I'm aware, at least at the time, they had no product at all. Uh, no revenues, no nothing. And the stock went up 270% before, well, you can imagine how that one ended.
But Zoetis is not that. So Etis is a legitimately um pretty good I think uh animal medicine company Exotica which does exist in the Eurob box and we were there slightly before Sith this time uh is also now part of the fundsmith portfolio um which is interesting and they're doing some interesting stuff at the moment with Meta around smart glasses or at least they're threatening to do some interesting stuff with Meta around smart glasses.
Whether that really emerges, we will see. But there is at least a degree of seriousness to that. And into it, which is the QuickBooks accounting software uh thing because um glasses and animal medicine are too exciting. So, we're going to buy a tech company, but we're going to buy one that's about accountancy.
Um I have some thoughts about the Funsmith portfolio uh for a little bit, Steve, but that's quite enough of me going on for the moment. Um did you think anything of either this performance or these moves? I I feel like we can't move on from Carol Basking as quick as that, especially as she managed to move a stock 250% and in the same uh week I think she was tricked into delivering a birthday shout out to Jimmy Savile and um Ralph Harris as well.
So um I'm amazed the stock market uh and the tricks that it gets up to sometimes. Um but yeah, looking down um Terry Smith's portfolio, I think it's quite easy to see why he's he's underperformed. I still don't really like the a lot of the stocks that he he holds in there. And throughout this letter, you can see that there's a a shortness uh to it, which kind of shows you that he's sort of losing patience with his underperformance, the uh macro factors affecting him, and also the fact that he seems to pick companies that sack the CEOs and then don't replace them for long periods of time.
Um you can see that as you read through it. Um, so it's it's not a huge update here, Steve. I would surprise as anybody that Philip Morris has has done as well for him as it has. I'm less surprised that things like Meta and Microsoft and IDEX have done L'Oreal must be having a decent period because it had had, you know, coming off the back of a a pretty bad period.
But yes, Nova, Nordisk, LVMH, Color Blast, uh, Waters, and Alphabet have all been a real drag um on on the portfolio's performance and and on my portfolio's performance as well. But um, yeah, I think it's basically ever since we've been covering Terry Smith, Steve, we've said pretty much the same thing.
Um, he's underperformed and he has a he has an excuse. Um, at the moment I don't think the uh the the funds have been taken away from him. Uh, they're not they're not drifting off to other funds. There isn't any funds out there at the moment, Steve, that are really um, you know, shouting out as the next the next big thing.
Um, so he he's keeping his inflows uh and and outflows fairly stable at the moment, but um, he can't keep underperforming like this, Steve, because it's okay for people to turn around and go, "But look at all this outperformance." Well, that's great, but you're not getting that anymore. and you haven't had it for the last four years.
Um, you know, you don't you can't buy a fund because of its history. You've got to buy it because of its future. And at the moment, uh, I would say, Steve, that fund is struggling. And, um, I'm not entirely sure that the stuff he's buying gives me the greatest confidence that it's it's going to be the next leg of growth for his portfolio.
Steve, I find it difficult to see, and obviously this is the case. I find it difficult to see what I'm missing without any of these buys that tells me there's some real insight going on here. Uh, they all look fine to my eyes. Now, no doubt there is something about them kind of going on here. And if it were Warren Buffett, like the actual Warren Buffett, not the UK's Warren Buffett, buying these things, people would be crawling, including me, would be crawling all over these to try and work out what the hell it is we're missing.
somewhere in its balance sheet, it's actually got uh some swaps that it turns out are worth more than the market cap or something. I'm just not driven to do that with Terry Smith in the same way. I'm I'm interested about the shape of his current portfolio though. So, one reason he's been underperforming over the last 12 months certainly um is that sectors have been doing well that he generally doesn't like.
So, banks and financials have done very well and he dislikes those as businesses. Uh utilities have done very well and he dislikes those as businesses. banks because they tend to carry a lot of debt, which is true. Um, and utilities because they tend to be very capital intensive, which is also true.
Um, those, however, have outperformed the S&P 500, they've been some of the leading sectors uh coming into in through the last sort of 12 um months or so. And whether you like it or not, if you sit those sectors out, it's very hard for you to keep back up again. Okay, fine. That's the way it is. Um in the meantime, um we've seen his largest two positions become at least now Meta at 9.4% and Microsoft at seven and a quarterish slightly more than that percent when I looked at the Fundsmith Holdings recently.
If he dislikes utilities because they're so capital intensive, it's very much worth noting that Meta and Microsoft are going down that road. They've both announced huge investments in AI data centers. So Meta 72 billion, Microsoft 80 billion. that is more than 50% of each of their current um tangible assets sort of net for depreciation in both cases.
In other words, they are sticking big amounts of capital even by their standards. Um and their standards are high in the sense that they're big businesses and low in the sense that they're not super infrastructure heavy usually, but they are going down that road and on paper at least that makes them a bad fit for the fundsmith portfolio.
Um, you can argue they're good investments. And I'm very sympathetic to an argument that says they're good investments because they will generate such big returns on these uh things that you will be glad that they spent 72 billion, 80 billion, whatever the hell Amazon is planning on sending out on these things.
Same for Google uh to some extent. Uh I'm perfectly open to hearing the idea that this will be worth it because this is AI infrastructure and AI is going to be the thing and we're going to need as much of it as we can get in terms of data centers and computing. But it is capital heavy. It is not capital light in the same way and I sort of wonder um what fundsmith is thinking about uh there because this is on the face of it they have a fairly straightforward kind of model.
It's not quite as straightforward as screening uh for things here, but you can get a long way to they used to broadcast stuff like their PE ratio of their portfolio and the return on capital employed from their portfolio and so on. And these things are either about to grow an awful lot or they're about to start screwing up their returns on capital employed.
And maybe you think it's the first one, but but big returns for big investments hasn't really been the fundsmith style of business. So, I sort of wonder about these and and how they're thinking about them a little bit. Uh, plenty to like about them. I have no argument with having them at the top end of a portfolio here.
But, but for Fundsmith, which aims at kind of well, it attempts to aim at what it considers to be kind of asset light uh businesses. Exactly. How well it hits that is a whole another question, but um uh it's starting to stick out a little bit to me here, Steve. Well, I was only having this discussion a couple of days ago with somebody on uh the trading 212 community who was uh you know trying to justify the high Ps that we've uh we experienced recently and they said well all of these businesses at the top are different to businesses sort of 30 40 years ago they're the capital light kind of businesses and I thought to myself well they they might have been uh two three four years ago but right now they are not they're uh those businesses are are spending vast vast amounts of money on things that depreciate fast.
This isn't like uh you know a property that you can depreciate over you know a decade or so. This is um these are chips that are pretty much bent out after three years. Some of them carry them on for three and a half. Some of them carrying on for four. But I can't imagine many of these companies are looking forward to having fouryear-old Nvidia chips in their um their data center.
Steve, I think they'll be uh they'll be getting um changed a lot quicker than that or being moved into other things. The other problem is is that the heavy load that's going to get put through these if AI takes off as much is is also going to make these chips burn out faster than they normally would.
So yeah, these are not capital light businesses anymore. Um they're still wonderful businesses. Let's let's not beat around the bush here. The the top lot of businesses are still incredible businesses, but they're not capitalike businesses anymore. So maybe this Steve is the thing that eventually gives us your uh you know your reversion to the mean nonpes.
Maybe this is the thing we finally look for that the guys at the top become um more like old businesses rather than new ones. Who knows? But um yeah, I think that's generally I I think I feel like Terry Smith has maybe perhaps lost his way a little bit and I think this does happen to people. I not I don't want to accuse him of of falling foul of you know new investor tactics but you can tend to chase gains when you're not doing very well and you can dial up risk and sell things that you would have otherwise have held and you know focus on one thing that might be working ignoring the other things that aren't.
And um there's a faint whiff of that from his last couple of letters and his changes that have happened and the things that he's bought and the things that he's sold. Um I don't know, Steve, if you want to add any color on that before we we shuffle on, but yeah, I think there's Yeah, I think I think there's a there's a little bit of pressure coming through here.
You can read the overall sort of letter reads as if somebody who was forced to write it rather than, you know, when we've read his first one, Steve, where he seemed to be enjoying himself a little bit more. It reads like a lot of excuse making uh to me, but um I'm only sort of mildly critical of that in the sense that man is a fun manager.
Man is underperforming. Um you better have an excuse rather than saying, "Uh, yeah, don't really know what happened, guys, but we seem to have gone backwards instead of forwards." Um, I mean, Terry Smith does actually quite nicely in some ways point out the difficulties of being a fund manager. And one that he points out that leads both you and I towards um, 3II in the Brit Box is the fact that when you take in investor money, it inevitably shows up at the wrong time.
It shows up at the time when you're doing pretty well, which basically means everything you own has gone up a lot. Uh, and everyone says, "Great, now go and buy me some stuff." And you think, "Well, I don't know what to buy at the moment. Everything seems quite high." When it all goes down and goes the wrong way, and you say, "Guess what, guys?
is great news. Everything's 30% cheaper. Um, no one's suddenly interested in buying anymore because you lost a load of money last year and things like that. And I think the inevitable need to make excuses for underperformance over a short but now slightly extending period. I mean, this letter is about the six months, which is a short period.
Um, to me kind of is the sort of thing I feel a bit sympathetic for. If we were reporting portfolio stuff and saying we'd underperformed over six months, we'd kind of say, "Oh, well," and get on with it. Um, but that doesn't really work when it doesn't really work when you're running other people's money and it definitely doesn't work.
Well, that bit I'm sympathetic for, but it definitely doesn't work when you're taking fees for running other people's money. Um, and that bit I'm kind of less sympathetic uh to. The main difference is we don't charge anybody uh for this stuff. We're not saying pay us 1%. By the way, we've lost another one as well.
Um, we're busy just doing our own uh thing. I guess you've been watching a segment from the Playing Footsie Show brought to you in association with our favorite broker, Trading 212. For the full version of the show, check us out on Spotify, Apple, or wherever you get your podcasts. And if you open a new account with Trading 212 using the link in the description, there's a free fractional share in it for you.
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