Smithson Investment Investors - SSON

Smithson Investment Investors - SSON

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Smithson Investment Trust Plc SSON London Ordinary Share GB00BGJWTR88 ORD 1P
  Price Change Price Change % Stock Price Last Trade
4.00 0.23% 1,732.00 16:29:49
Open Price Low Price High Price Close Price Previous Close
1,734.00 1,730.00 1,740.00 1,732.00 1,728.00
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mattboxy: Sorry to hear that but she was indeed a wise investor - good luck!
lomax99: Questor: our investment trust tip of the year – 'This is one you can buy and lock away'Questor investment trust bargain: Smithson, the Fundsmith for smaller stocks, proved itself during the pandemic last yearThe pandemic has provided Smithson, the global investment trust for smaller and medium-sized companies from the Fundsmith stable, with its first major test. And so far it has done exactly what it set out to do: it has delivered steady returns despite the sharp market sell-off in March.Over the past 12 months Smithson's share price has risen by 29pc, in line with its net asset value, and has outpaced the 13pc rise in the MSCI World Small Cap index.The portfolio has proved relatively defensive: its largest "drawdown" or peak to trough decline last year was 17pc. Rivals BMO Global Smaller Companies and North Atlantic Smaller Companies recorded NAV drawdowns of 35pc and 24pc respectively, according to Winterflood, the broker.In light of these promising numbers, Callum D'Ath of Brewin Dolphin, the wealth manager, has selected Smithson as his top investment trust pick for 2021.He came up with last year's best performer, Edinburgh Worldwide, which also invests in global smaller companies but has more of a "growth" focus than Smithson. Edinburgh Worldwide has gained 68pc since we tipped it in February 2020, so we have high hopes for Mr D'Ath's latest trust idea."I think Smithson is brilliant," he said. "It is one of those investment trusts that you can buy and lock away."Smithson's resilience in 2020 is perhaps no surprise, given its focus on "quality" small and medium-sized companies around the world. The manager, Simon Barnard, invests in well-established businesses, typically leaders in their industries, that have the potential to generate cash and produce consistent returns.The fund holds the likes of Domino's Pizza and Equifax, the credit score agency. Mr Barnard aims to buy good companies at the right price and then "do nothing", simply letting the investments compound in value over time.It is the same philosophy that Fundsmith's founder, Terry Smith, follows with his successful "open-ended" Fundsmith Equity fund, which invests in large companies around the world with similar characteristics.While Mr D'Ath said he rated both funds, he suspected that Smithson had the potential to outperform its larger cousin over time because of its bias towards medium-sized firms."These are well-established businesses with a huge runway for future growth. It is a great area to invest in and I think Smithson is a fantastic way to do it," he said. That doesn't mean investors have to decide between the two funds: Mr D'Ath said there was a place for both in a diversified portfolio.Smithson Investment Trust key factsMarket value: £2.4bnYear of listing: 2018Discount: 3.6pc premiumAve discount over past year: 1.9pc premiumYield: nilMost recent year's dividend: nilGearing: nilAnnual charge (June 2020): 1pcAlthough Smithson looks great on paper, it would be remiss of Questor not to highlight certain facts. First, it is a concentrated portfolio, comprising only 31 stocks, with an unashamed focus on capital growth rather than income (it has never paid a dividend).Second, the eagle-eyed among our readers will be quick to highlight the trust's persistent premium, which stands at 3.6pc. For some, this could be a sticking point.However, Mr D'Ath said he was not too concerned by it; he said it was becoming difficult to find good trusts that weren't trading at a premium. "Smithson is a popular trust and has pretty much traded at a premium since its launch in October 2018," he added.He said the board continued to issue shares in a bid to keep the premium in check: the trust raised £393m (net of costs) over the course of 2020, according to the Association of Investment Companies.Questor says: buy on weaknessTicker: SSONShare price at close: £16.96Finally, it is important to highlight the trust's annual management charge of 0.9pc, which is higher than those of a number of its global equity peers. This might represent another stumbling block for some of our readers.While costs remain an important consideration, Questor believes there is still much to be said for the trust's potential to generate stable and growing returns over time.And if 2020 is anything to go by, this "Steady Eddie" has more to give. This is one to buy whenever the shares take a stumble.
bezer: 77 $Bill?! This is not for Smithson investors. Main Fund only. Go Terry!
the juggler: htTps:// Terry Smith in FT yesterday.
bezer: I would politely argue that there is virtually no chance of Mastercard being in the Fund whilst he holds Visa and Paypal. Mastercard was discussed at the AGM just over a year ago and it was classed as a mistake, as he does not own it and it had outperformed Visa. Admittedly he loves the payment industry but Paypal is the no 2 holding so he holds an awful lot of stock in the industry. This is why his beloved L'Oréal is rarely/if ever seen in the top ten holding because he owns so much of Estée Lauder. For me, the big question is the sale of Clorox. The more I think about it the more of a bolt out of the blue this news is. I have been looking at the dates and it appears that a return of approximately 21% was made during the recent holding. Very nice but as it is such a sound company it begs the question of why sell? It will be most interesting to hear his reasoning behind this sale when he pens his annual letter to shareholders. In the mean time, Smithson investors should be very happy. I know I am.
bezer: As we go into this Easter Weekend, we have the "scores on the doors". Since Jan 1st 2020 YTD: Fundsmith T Class Equity -5.09%. Smithson Investment Trust -5.39%. In this year from hell?! LOADS of luck - I managed to top up on Smithson at below inception price on March 20th. Very fortunate. I wonder if I have joined the ELITE, not only was I an original Smithson Investor, I can add I bought just north of £20K at below inception price - £9.58. Very, very lucky. Be safe people.
lomax99: 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.
lomax99: 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://'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: Certainly until proven otherwise, such as Woodford and Mark Barnett. Again, I think their fall from grace has and will send more investors this way.Being an ex pat I can only access quoted funds, I would not usually allocate such a high percentage to one holding, but this does seem to be exceptional.
villarich: I'm assuming you're a pretty intelligent person, therefore you won't have misread the Smithson prospectus. So you must be deliberately misinterpreting what it says to fit your views.It does not say investors have to wait 5 years for a decent return. It says it is aimed at investors who have a medium to long term time horizon. Like any value investing approach, they advocate holding for the long term to smooth out the peaks and troughs but ultimately they're looking to buy good companies.
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