Smithson Investment Share Discussion Threads

[thelongandtheshortandthetall] 29/2/2020 14:52

basstrend

They probably dropped further because they went from a premium above NAV to a discount on a much lower NAV.

Big fan of SSON here BTW

[basstrend] 29/2/2020 13:30

Yes the SSON share price got clobbered, along with the global markets in general. This is down to general panic and hysteria over the coronavirus of course. Some might argue that some stocks were getting a 'bit toppy' too so maybe some form of correction was due at some point. I'm not sure about that.

I hold six investment trusts in my SIPP, including SSON and they all took a severe bashing last week.

In just one week the average drop was 17%, which is quite a bit higher than the global markets dropped in the last week. Not sure I understand why ITs suffered worse (other than travel related stocks) compared to other stocks and indices..

Anyway, here's the drop I observed on the 6 trusts mentioned above, in the last 5 market days only -

18.95% ATT - Allianz Technology Trust
18.28% THRG - BlackRock Throgmorton Trust
18.85% MNL - Manchester & London Inv Trust
14.86% PCT - Polar Capital Trust
13.69% SMT - Scottish Mortgage Trust
17.39% SSON - Smithson Inv Trust

NB the average 5 day drop across these 6 IT's is: 17% - quite shocking really!

[spacecake] 29/2/2020 11:41

FEET pain a small dividend.
Anyway the share price got well and truly clobbered this week, coronavirus panic or something in the results ?

[chucko1] 26/2/2020 08:44

Some time ago, in one of his annual proclamations, TS explained in detail why he paid no dividends. If you want income, sell a few shares yourself as and when. The return analysis backed up the concept that it all amounted to the same thing as him paying them himself. The idea is that his funds will return more if kept invested, of course.

[wirralowl] 26/2/2020 08:36

Thanks bezer

[bezer] 25/2/2020 14:25

WirralOwl: For the time being there will be no dividend paid. The below is from the Interim Financial Report, dated August 2019.

Dividends
The Company's principal objective is to provide shareholder returns through long-term capital appreciation rather than income. In accordance with the Company's policy, an interim dividend has not been declared by the Board.
This position will be kept under review. It should not be expected that the Company will pay a significant annual dividend, but the Board intends to declare such annual dividends as are necessary to maintain the Company's UK investment trust status.

[wirralowl] 25/2/2020 13:39

Can anyone confirm if we're ever likely to receive dividends from SSON? I can't put my finger on it, but have in mind that we'd receive a small annual payout from SSON, of a similar level to the payment received from Fundsmith? TIA.

[llygad] 26/1/2020 20:07

Clorox mentioned in T Smiths' annual letter to fundholders. Probably can be accessed on Fundsmith website and well worth a read.

[bezer] 26/1/2020 10:53

This is my list that I have built up for the holdings of Smithson. I believe it is comprehensive. It is well worth putting these cos into a spreadsheet and banging in what they were 1/1/19 and now. The overall results are VERY impressive when you average the %up/down....... I hope this is helpful.


Nemetschek
Paycom
Verisign
Technology one
Equifax
Verisk Analytics
Masimo
msci
Dominos Pizza Enterprises
Recordati Spa
Rightmove
Ansys
Abcam
Check Point
Simcorp
Sabre
Cognex
Spirax-Sarco 
Ambu
Halma
Fisher & Paykel
IPG Photonics
A.O. Smith
Temenos
Fevertree
Geberit
Diploma
Dominos Pizza Group
Chr. Hansen

[bezer] 26/1/2020 10:21

If you want to look at a real success for Smithson, please look at their holding in Paycom Software. To a lesser extent: Nemetschek and Msci. Yes, there are about three failures so far in the portfolio but the successes dwarf them.

[checkers2] 17/1/2020 12:17

Out of interest where did you find the CLOROX reference llygad?

[the juggler] 17/1/2020 12:03

Diolch llygad!
The performance here too of Smithson over 15 months has been incredible.
I’ve been in Fundsmith since February 2015 and can only wish I had known of it earlier.

[llygad] 17/1/2020 11:21

Fundsmith buying Brown-Forman (Jack Daniel's distiller) and Clorox (US household products & personal care.

[brexitplus] 07/1/2020 15:12

I have a recollection that it is another luxury goods/cosmetics company, but can remember where I saw it.

[goyathlay] 07/1/2020 12:37

Terry has bought a share for the main fund. Anyone out there have any idea which one?

[skyship] 05/1/2020 10:58

A truly stupendous performance - well done all holders. NAV up 33.3% in 2019.

I totally missed this one. For the time-being will stand aside; but have now placed it on my Monitor.

I'm reluctant to delegate investment responsibility; however, though I achieved what for me was a highly welcome 19.7% in 2019, I have to acknowledge that the SSON management team and strategy does perhaps deserve some weighting in my SIPP.

[gconvery] 20/11/2019 10:57

NAV moving up nicely with Halma and Fevertree doing well...I've moved some Lindsell Train profits in here...

[lomax99] 29/10/2019 19:26

The Times:Smithson Investment Trust: Early signs suggest long-term successNever one to care much what the rest of the world thinks of him, Terry Smith has contentedly ploughed his own furrow since setting up his own investment management firm nine years ago. With a distinctive, selective, long-term investment style, Fundsmith made its name with the unlisted £18 billion Equity Fund, which was launched in 2010.Turn the clock forward to October last year and Fundsmith launched the Smithson Investment Trust, one of two listed vehicles that it manages - something it did in part to cater to the weight of investor demand and in part to capitalise on the relative investment success of companies smaller than those the fund generally had invested in.This trust, valued at just above £1.3 billion, is similarly distinctive and it should be swiftly apparent that it is not for everyone. First, it is concentrated, with only 29 holdings as of the end of September; second, it is unashamedly in the business of delivering capital appreciation for shareholders, rather than being a big dividend payer (there was no award at the half-year stage in mid-August, for example). Third, at 0.9 per cent, its annual management fee is high relative to a lot of other investment trusts. And, finally, it is avowedly not for those seeking a quick return. Buyers of this trust should expect to squirrel it away out of sight for at least three to five years, possibly longer.Yet there are plenty of characteristics that make it worthy of a closer look, at the very least. The trust's investment mantra is to buy companies that are already successful, more often than not leaders in their chosen field, but nevertheless capable of generating consistent returns over the longer term. It tends to prefer businesses whose standing is built on intangible assets, such as a brand name, or - crucially - something that cannot easily be imitated or supplanted.Once acquired, Smithson aims to sit on its holdings, topping up its ownership in times of price weakness and selling out only as a last resort. It did so last month for the first time with CDK Global, a supplier of software and marketing to car and truck dealerships in the United States and Canada. It also occasionally adds holdings, as it did in July when it bought a stake in Fevertree, the upmarket tonic brand.Although it describes its target companies as small and mid-sized, the range by market capitalisation of between £500 million and £15 billion is extremely wide and the average size, of about £7 billion, is probably high in the eyes of most British investors. That explains why FTSE 100 companies such as Rightmove, the property website, and Halma, a specialist in safety and hazard detection systems, feature prominently in the portfolio. The biggest holding is in Equifax, the US-listed credit data company whose market value weighs in at about £12.8 billion.In many ways, Smithson's chosen companies are not obvious and operate in sectors - online property search (Rightmove), data and analytics (Verisk), payroll and HR software (Paycom), even pizza delivery (Domino's Pizza) - that are rapidly changing or are subject to disruption. To its credit, though, the trust is sticking with it and so far its returns back it up. Launched into the teeth of last October's ferocious market sell-off, it has since comfortably beaten its reference index, the MSCI World SMID. The shares have gained a respectable 21 per cent and have always traded at a premium to the net asset value per share. The signs are good.Advice HoldWhy Carefully considered portfolio chosen by respected investment manager that has got off to a strong start.

[chucko1] 23/10/2019 20:49

Well, the renewed GBP strength is playing some part in that. Equally, its previous weakness assisted the NAV getting to where it is today.

[andyj] 23/10/2019 12:41

Well the NAV is slowly falling, they continue to issue new equity, the uptrend is broken and the premium is growing. Not a happy short term combination and I will not be adding for a while.

[lomax99] 12/10/2019 11:16

Added a few around £12.07, profiled in Shares this week:Smithson lives up to the hype as the Fundsmith trust turns oneWe explore how it has achieved nearly 19% return in 12 months A year ago Smithson (SSON) became the largest ever investment trust launch, raising £822.5m to invest in quality small to mid-cap companies. Investors lapped up the shares in the hope they would deliver similar success to its sister fund, Fundsmith Equity (B41YBW7).Their faith has been rewarded with Smithson having achieved 18.8% return since launch on 19 October 2018 versus 19.7% from the flagship Fundsmith fund over the same period.This great start will have certainly been helped by the timing of Smithson's launch which happened during a weak period for the stock market, thus valuations were lower for many companies. That's advantageous when trying to build a portfolio.A good start will boost sentiment towards the trust but it will take several more years before you can truly start to judge its performance.Smithson's top holdingsAmong the top holdings is Verisk Analytics, a data provider for the insurance and natural resources industries. It has the world's largest database of insurance claims information. 'When you are doing anything in insurance – writing a contract, managing your claims, doing fraud detection – data is absolutely key,' says Morgan.Https://www.sharesmagazine.co.uk/wp-content/uploads/2019/10/Screenshot-2019-10-09-at-09.11.10.jpg'Insurance companies buy the data from Verisk and generally do so via long-term subscription contracts. If an insurer goes to buy data from Verisk, they first have to also give them all their data.'The bigger the data pool the better, so as they grow the barriers to entry keep getting bigger, like a network effect.'FUNDSMITH EXTENSIONSmithson was created to take advantage of good companies that would be too small for Fundsmith Equity as the latter focuses on very large businesses. A team was assembled and they spent a year writing approximately 150 reports on stocks that matched the same criteria used for Fundsmith Equity, namely a focus on aspects such as free cash flow.Many of these potential companies were subsequently rejected, leaving a much smaller investable universe which currently stands as 77 stocks. Of this universe, Smithson currently has positions in 29 companies.A focus on quality is interesting as investors have been prepared to pay high multiples for seemingly top-notch businesses for many years on the stock market. Late August this year saw a sudden rotation where investors switched to buying value stocks, namely companies on very cheap valuations.So far it looks like this could be a short-term switch. But if quality did go out of favour, it would arguably also leave Smithson out of favour given its quality focus.Portfolio manager Simon Barnard insists such an event wouldn't prompt him to change his style as he believes any shifts in the market are 'irrelevant'. He comments: 'Our strategy is fairly clear – buy good companies, don't overpay, do nothing.'Sometimes the market throws up opportunities, sometimes it doesn't. We aren't aiming to outperform in every period, we are aiming to outperform in the long term. It would seem crazy to change a long term strategy that works for a short term change in the market.'THE VALUATION DEBATEBarnard says he is looking for value, just not really cheap and potentially inferior businesses. The fund manager says he often gets asks by investors why he has invested in what look like very expensive companies such as Halma (HLMA) and Rightmove (RMV). His answer is that investors may be looking at the wrong valuation metric.'We focus on free cash flow yield. Rightmove generates a lot of free cash flow; when you look at it on that metric it is not that expensive compared to other things on the market.'Assistant portfolio manager Will Morgan says at Smithson's half year stage (30 June 2019), the portfolio valuation was the same as the reference market which is the MSCI World Small and Mid-Cap index. 'We think we are getting at the same price much higher quality businesses that also grow about 1.5 times the rate of companies in the reference index,' he comments.'If you were to look at the portfolio on aggregate, our companies on average have nearly four times the return on capital employed of the reference market. They tend to have much higher operating margins, significantly higher cash generation and much lower leverage so we can be fairly confident that the quality of the businesses we own are significantly ahead of that in the market.'Even though the headline multiples might appear high to some, there is a difference between being highly rated and being expensive.'TERRY SMITH'S ROLEThe tremendous success of Fundsmith Equity – which has delivered 18.6% annualised returns since launch in November 2010 – means that Smithson's fund managers were under pressure from day one to deliver equally strong returns. In particular, there was also the fact that Fundsmith Equity's architect and fund manager Terry Smith wouldn't be running Smithson.'Expectations are high internally and externally,' admits Barnard. 'Ultimately all we care about is the performance.'At the end of the day we are investing people's life savings. The fact that we get to meet a lot of our investors helps to remind us of that – it is very motivating. We are very focused on executing the strategy to the best of our ability.'Investors may find some comfort that Smith is still closely involved with Smithson despite not being behind the wheel. 'Day to day we just get on with it. On big issues like selling a position outright or making an investment in a company for the first time, we would always consult him in his role as Fundsmith's chief investment officer, but I as portfolio manager make the final decision,' clarifies Barnard.Dealing with portfolio detractorsSmithson's performance is really impressive but like all funds there are weak spots. It recently sold US auto industry software provider CDK Global after a change in management and strategy left the fund managers lacking confidence in the firm.The investment trust has also had to stomach recent share price weakness in Ambu which makes disposable endoscopes. 'So far the market has been reusable ones, but the problem is that they are expensive to buy in the first place and very expensive to clean. There is also a risk that the cleaning process is not adequate and therefore a high risk of contamination,' explains Morgan.He says Ambu has developed a disposable endoscope which at the moment costs the same as it would do to clean a reusable one, with the added benefit of removing the risk and liability of contamination.'It is in fairly early stage of what we expect to be long term growth. Ambu has had issues with timing of product launches and a change in CEO which has led to concerns that the long term market opportunity is not as big as people once thought. But we believe the opportunity is as big.'BROAD EXPERTISEBoth Barnard and Morgan joined from investment bank Goldman Sachs where the former was a fund manager and the latter an analyst. They were recruited to launch Smithson, alongside Fundsmith analyst Jonathan Imlah, due to their expertise.Combined they have covered many different sectors which is handy as Smithson doesn't have a specific sector or geographic market focus.For example, they are comfortable analysing and investing in Spirax-Sarco (SPX), a UK steam engineer. 'Steam is used in the manufacture of almost any product you care to imagine,' says Morgan. 'Spirax has a highly skilled salesforce who are highly qualified engineers and who are embedded in their customers' businesses.'The fact Smithson's investable universe is only 77 stocks at present means the fund managers can focus on those businesses and read large amounts of relevant material. 'Warren Buffett famously said you only need moderate intelligence to understand all of this; you just don't want to be making mistakes,' says Barnard. 'These are not complicated businesses (in the portfolio).'It also helps that its portfolio companies are at a mature enough stage so the managers can have comfort in their business models. 'These are companies which are highly profitable and have good track records,' remarks Morgan. 'The numbers tell you something.'If we were looking at speculative businesses or speculative technology, pre-revenue or pre-profit, then we might need some expertise to guess if the thing is going to work. That isn't a game we are going to play. We are looking at companies that have already won.'SHARES SAYS: Smithson is certainly delivering for investors and it is always welcome to see a fund that is transparent about what it does and how it aims to make money. We rate this as a core holding for a diversified investment fund.

[andyj] 05/8/2019 17:36

I agree. Will be adding more if it drops below 12.

[marksp2011] 04/8/2019 13:50

The sign of a good investment that you don't need to worry about is that there an no posts on ADVFN
Long may it continue

Four biggest holdings in my portfolio

FGT
LTGE B inc
Fundsmith Equity I Acc
SSON

[thelongandtheshortandthetall] 28/6/2019 12:21

Edwards9

cheers mate - listening now!!

[edwards9] 28/6/2019 12:14

Brewin Dolphin podcast interview with Smithson:hTTps://www.brewin.co.uk/individuals/insights/regular-reflections/is-smithson-the-right-move/?utm_source=twitter&utm_medium=social&utm_campaign=podcast