Smithson Investment Share Discussion Threads

[topvest] 03/5/2022 20:07

It will be interesting to see what happens, but I would be surprised if anything comes out of it.

The only obviously "dodgy" thing with Fundsmith LLP is the slightly underhand relationship with Fundsmith Investment Services Limited in Mauritius - £188m went to Mauritius last year. I have always thought this is lacking transparency for a business of this size, as obviously a great proportion goes to Terry Smith. Why try and pull the wool over everyone's eyes? Maybe the FCA want to take a look given they don't want a Woodford II!

[hectorscrackhouse] 03/5/2022 19:48

Terry has added Adobe and Mettler-Toledo (precision instrument manufacturer) to the main fund.

[chucko1] 03/5/2022 08:30

Whatever is behind it, Section 166s are NOT insignificant things.

[steve3sandal] 02/5/2022 12:58

I’d be slightly more concerned to prevent online financial scams but that’s far too hard for the FCA. Yes it’s $28Bn but deep liquidity and daily real pricing so I’m doubtful Fundsmith would make the FCA look asleep at the wheel. Anyway we will hear no more about it until it’s done.

[ceaserxzy] 02/5/2022 12:36

I would think and hope he won't get into big trouble. It is much better such distraction being avoided in the first place.

[ianood] 02/5/2022 12:03

caeserxzy - ITS's A REVIEW - I 'd be astonished if the FCA trip him up!

[ceaserxzy] 02/5/2022 11:43

who would have thought the guy who came to fame by exposing fraudulent company accounting practices is not whiter than white and needs to be reviewed!

[sf5] 02/5/2022 10:22

Thanks - here's the link. Agree it's not a good look. Unclear if it's to do with charges, marketing hype, risk controls or something else

[wydffa] 02/5/2022 10:13

Daily Mail reports FCA requires section 166 review of Fundsmith, if true likely will affect sentiment for SSON

[frederickbloggs] 29/4/2022 08:54

Good luck. Held SSON from day 1 and despite excellent early performance, lately it's been awful. Here's hoping to see a share price climb back towards £20 soon.

[steve3sandal] 28/4/2022 16:01

Just popping in to say I'm now a SSON shareholder. If nothing else I will learn something. A discount and nearly 30% share price fall might be an opportunity. The Macro is very poor but their stock process is one which should benefit if we ever get good news again. I'm probably early, I'm always early.

[beltd] 23/3/2022 09:25

Thanks Sphere. Think this investment report from Ruffer last month also highlights the challenge faced. Obviously this trust is positioned more defensively but articulates well the risk.Monthly Investment Report February 2022:

[sphere25] 18/3/2022 12:15

No problem BELtd.

A decent article here:

Fund managers are divided on whether the US Federal Reserve can implement its biggest tightening cycle in decades without tipping the economy into recession.

The central bank lifted interest rates by 25bps last night, its first raise since 2018, and set the course for six more hikes this year as it looks to rein in inflation running at a 40-year high.

Chair Jerome Powell (pictured) said the Federal Open Market Committee was ‘acutely aware of the need to return the economy to price stability’ and pointed to ‘extreme’; tightness in the labour market. He was keen to play down recession fears, insisting ‘the American economy is very strong and well positioned to handle tighter monetary policy’.

Others are not so sure the Fed can carry off the fine balancing act of tackling inflation, which has been exacerbated by the war in Ukraine, without stymying growth.

‘It won’t be easy. Rarely has the Fed safely landed the US economy from such inflation heights without triggering an economic crash,’ said Principal Global Investors chief strategist Seema Shah.

‘Furthermore, the conflict of course has the potential to disrupt the Fed’s path. But for now, the Fed’s priority has to be price stability.’

Last night’s increase, taking the target range to 0.25-0.5%, was widely flagged, but the Fed could yet throw out some surprises down the line.

The committee members voted 8-1 in favour of a quarter-point raise, with St Louis Fed president James Bullard the outlier calling for 50bps. But the dot plot, which signals the future direction of rates, revealed that four committee members estimate more than seven increases will be needed this year, suggesting at least one 50bps hike could be on the cards.

‘The risks of a central bank-induced recession and policy error are high and rising,’ said M&G fund manager Ben Lord.

‘But given how high inflation is, how elevated expectations are, and how behind the curve central banks are, we all need to prepare ourselves for a series of hikes in the coming months and perhaps years, depending on what happens to aggregate demand. And we also need to prepare for the risks that such monetary policy action could have on consumption, the economy and portfolios.’

Economic growth expectations are already being scaled back as higher oil prices, the war in Ukraine and renewed lockdowns in China weigh on global consumption. The Fed downgraded its US GDP outlook for 2022 from 4% to 2.8% in its Summary of Economic Projections released yesterday.

Goldman Sachs last week cut its prediction for US growth from 2% to 1.75% as the bank put the odds of a recession this year at 20-35%, in line with what the market is pricing in.

Despite the doom and gloom, the odds point to a slowdown rather than recession currently. Six further 25bps hikes by the Fed would only take rates back to pre-pandemic levels, putting them into or just above ‘neutral’; levels, but with household balance sheets much stronger after the savings accrued during working from home.

‘For now, the outlook for the US economy is one of resilience rather than recession, and [it] is capable of absorbing the higher interest rates,’ said Kerry Craig, global market strategist at JP Morgan Asset Management.

The caveat to this is that the Fed needs to be patient in bringing down inflation, said Blerina Uruci, US economist at T Rowe Price. Her base case is that the economy has an ‘orderly exit from the current accommodative policy stance, avoiding a recession’.

To achieve that, she expects the Fed to tolerate personal consumption expenditure inflation, its preferred measure, remaining above its 2% target until the end of 2023.

The two risks to a soft landing Uruci foresees are the Fed overcompensating for its inaction by raising rates too quickly or the strength of the labour market, consumer demand and supply shocks pushing inflation higher.

‘Recent consumer survey data indicate that while long-run inflation expectations remain well anchored, short-term expectations have moved significantly higher,’ she said.

‘Without strong Fed policy tightening, longer-term inflation expectations could also increase, resulting in higher inflation becoming entrenched in the economy.’

[beltd] 15/3/2022 20:55

Well thank you for the time taken on that post, it's always good to read views and appreciate you sharing yours. Certainly unnerving times which more often than not are opportunities in the market. It's not about timing the market but time in the market as they say. Atb. I share the optimism

[sphere25] 15/3/2022 19:35

Quality will shine through. It is just one of those terrible markets that are part and parcel of the cycles we all go through. It makes people feel horrible, but better times will follow.

Even if there are sanctions on Russian energy, leading to astronomical moves in energy prices, that then lead to a recession, we will still come out of this. It will take some time, but I think folk will look back and be glad they invested in quality.

Recession risk from Fed Survey:
33% saying a recession to follow in the US in the next 12 months
50% saying a recession to follow in Europe in the next 12 months

It is just the timing that is a nightmare at the moment. That survey shows how tricky it is. If Putin wasn't in the equation, it becomes easier - not easy, but easier. You can see the markets trying to rally and moving inverse to oil.

If we could confidently say Putin was out of the equation, oil just bobs around in a range anywhere around these levels or even abit higher, I really think the market would bounce back very sharp and then find a range to sit in back above key support levels where they sat before Putin.

I think the consumer would then not take this big confidence hit in regularly seeing..."Energy bills going to £3000-£4000", "Bread up 20%", "Petrol prices at records as further warnings on rises", "x,y,z company increasing prices", "Holiday surcharges to hit families further" and so on and so on and so on...

Unfortunately, it isn't that simple and it is hard to call what headlines we wake up to in the morning so even this attempt to move higher driven by the US is fraught with peril.

If I was a longer term investor, looking ten years plus out, I'd definitely be looking at the quality shares hammered down to low teen or single digit multiples and thinking about averaging in.

I could say "The balance sheet can stand a downturn and even if the earnings contract by x%, alot is priced in or there is x% downside to earnings, I am ok for all that to play out".

But that isn't me. Everyone has their approach, but this is the challenge that comes with markets. It can be abit fight or flight at times, but risk management is everything.

No need to be a hero.

Manage risk and we all come out of this.

All imo
DYOR

[beltd] 15/3/2022 16:48

I do like the analogy. Whether it proves true we shall see

[sphere25] 15/3/2022 16:03

This is a unique snippet from the report:

"Imagine a dog walker crossing a field, their dog wildly zigzagging around them. We would relate the companies we own to the walker, clear in direction and making steady progress across the field, while the daily market price is like the dog, moving back and forth quite randomly. Now, the current economic storm may well send the dog cowering for cover, but given enough time, we know that the price and value will eventually meet again, just as the dog and walker will ultimately leave the field together. We also know that, as well as making constant progress, a high quality company, if it trips during the storm, will rise again and keep going. Low quality, value companies on the other hand, may never get back up."


Certainly one way to put it!

[arja] 21/2/2022 20:23

awful looking chart but support at 1400 level.

[beltd] 07/2/2022 19:22

I am glad I'm not the only one who felt the same. Worst monthly performance since the fund listed. Thought a bit more comment would have been appropriate, the lack of gave an arrogant impression. Will this fund only perform when growth and risk is on?

[hectorscrackhouse] 07/2/2022 11:16

Annual letter to shareholders. Hasn't aged particularly well given the performance in January!

[hectorscrackhouse] 03/2/2022 09:57

Moncler added to fund. French/ Italian retailer known for luxury ski wear.



(Incidentally, Alphabet has been added to main fund)

[beltd] 31/1/2022 21:13

Looks like the bounce back is upon us for now.

[beltd] 24/1/2022 20:04

https://seekingalpha.com/article/4480845-buy-the-dips-high-inflation-will-end-soon

[1nf3rn0] 24/1/2022 11:50

Added a little more