Fundsmith Emerging Equit... Share Discussion Threads

[edwardt] 09/1/2015 14:37

coming back to the realms of reality. at nav by the end of the month?

[spacecake] 05/12/2014 12:18

Hindustan Unilever valuation ..

[wirralowl] 05/12/2014 11:01

Funnily enough, that's similar to how I feel about FEET. I want to buy, but can't seem to get a foothold at a premium I'd be comfortable with.

[mad foetus] 05/12/2014 09:38

still only 49% invested and I saw a news item on ULVR suggesting Unilever Hindustan looks expensive. I think Terry is in a tricky place: he doesn't like to time the market but I suspect he thinks valuations are high and doesn't want to chase them higher.

[mad foetus] 01/12/2014 11:48

Thanks Jon - very good point. Also, reduced oil price will reduce the costs for the companies manufacturing and transporting the soft drinks, detergents and bottles of sauce to the end user.

[jonwig] 01/12/2014 11:43

Hi, mad.

I might add that low oil prices are good for some emerging markets and companies, and particularly the ones FEET invests in: "provide direct exposure to the rise of the consumer classes in those countries".
And he won't invest in energy.

[mad foetus] 01/12/2014 11:36

You have to go back to the basic premise, that the growth potential in the Fundsmith stocks that operate in emerging markets is high. I regard Henderson Smaller Companies as a very good investment trust: it managed 15% pa over the last decade (300% once compounded). According to the FEET prospectus, the investible universe for FEET companies managed 30% pa over the same decade, near enough 1,000% once compounded.

The key point is that there is no alternative to FEET: if you want to invest in emerging markets but don't want South Korean semi-conductors or Indonesian Banks, this is it. The premium (or discount) will reflect whether the basic premise, which has been true in the past, is perceived as holding good for the future. But if you do the maths, if you intend to hold for 5 years plus, a 50% premium would be worth paying if (big if) you get 30% NAV growth every year.

[nfs] 29/11/2014 17:04

Surely we will have to wait for a set of accounts......or a mini or major crisis somewhere for the price to be hit ?

[edwardt] 28/11/2014 18:34

well I am getting this one wrong!

[edwardt] 19/11/2014 12:43

from my experience it will not last - either nav will go up and the premium will be removed over time or the nav will have a glitch and the premium will erode quickly. terry is good but he can not stop shareholder sentiment changing in short term. I will own this when the price is correct. I only pay premium prices for good wine.

[spacecake] 18/11/2014 20:04

Must be a healthy demand for the stock.

[jonwig] 17/11/2014 14:25

mad (LOL - again!!) - I agree.

What I did was to sell my existing IM inv trust (JPMorgan) and invest the proceeds in this at IPO time. It may be that this sort of thing is driving the share price up?

[mad foetus] 17/11/2014 13:05

well I invested for the long term and so the premium doesn't concern me hugely. I guess it reflects how well Fundsmith Equity has done since launch and in particular this year, where it has managed over 15% in a fairly flat market. If you believe that the prospects for growth in emerging markets are better than in established ones and if you think the Terry Smith approach will work in such markets, then this is the only option, and it may be worth paying a 10% premium upfront to get 10%pa outperformance over the long term.

But it is remarkable and I would much prefer to see the share price move up on NAV growth rather than a widening premium.

[edwardt] 17/11/2014 12:35

i don't get the valuation here. terry is good but the valuation on this trust does not make sense to me.

[scottishfield] 07/11/2014 09:53

many tks jonwig.

[jonwig] 07/11/2014 09:52

scottish - nope. Prospectus p10:

At least initially, the Company does not anticipate paying any dividends.
The Company’s intention is to provide capital growth and not to provide any
particular level of dividend. The Company will comply with the investment
trust rules regarding distributable income but does not expect significant
income from the shares in which it invests. Any dividends and distributions
will be at the discretion of the Board.

Sorry!

[scottishfield] 07/11/2014 09:41

Is there an expected divi here please guys? tks.

[topvest] 06/11/2014 20:24

At least they are cautious on investing their money. A breath of fresh air versus the buy the whole portfolio on day 1 crowd!

[spacecake] 06/11/2014 18:41

Thats now 45 holdings or 44% of the way there as of 31st Oct 14. I wonder if the will give us a top ten list when cash is less than 50%.

[mad foetus] 03/10/2014 13:42

they really are taking their time getting invested: over 3 months in and only 37% of the way there. Mind, with emerging markets dropping back a bit recently, maybe now is a chance to up the pace!

[spacecake] 08/9/2014 21:02

and the premium continues to widen !

[maiken] 04/9/2014 13:57

the website says it was 25% invested at the end of August

[mad foetus] 04/9/2014 13:50

well, today marks the first time that the NAV has exceeded the original offer price. Let's hope it also means that we are getting more invested!

[mad foetus] 04/9/2014 09:01

what index are you talking about?
I think the premium looks excessive, but Terry Smith has a great track record and if you want access to this fund then there is no open ended option. Everyone who bought at launch will have done so on the basis of a long term investment, as there are so few long only equity closed ended launches these days it wasn't clear if this would trade at a premium or discount.
So while it may rerate, unless those who invested looking for a 300% return over 10 years decide they are happy with 9% in 2 months, there isn't going to be much selling. I wouldn't buy at this premium but unless the NAV starts to show that Fundsmith are out of their depth (and they are so far only 25% invested) then I don't see it dropping much either.

[edwardt] 03/9/2014 09:31

9% premium - once it gets included in index, it will derate as sure as eggs are eggs.