META - Tracking Terry Smith's Fundsmith 13F Portfolio - Q1 2023 Update

2023-05-30 12:30:57 ET

Summary

• Fundsmith's 13F portfolio value increased by 6% to $23.17B in Q1 2023, with top holdings in Microsoft, Philip Morris International, and Stryker.
• The fund increased its stakes in Procter & Gamble and Apple, while dropping Adobe during the quarter.
• New stakes were established in Graco Inc., Marriott International, and Mastercard Inc.

This article is part of a series that provides an ongoing analysis of the changes made to Fundsmith’s 13F portfolio on a quarterly basis. It is based on their regulatory 13F Form filed on 5/15/2023. Please visit our Tracking Terry Smith’s Fundsmith 13F Portfolio series to get an idea of their investment philosophy and our last update for the fund’s moves during Q4 2022.

This quarter, Fundsmith’s 13F portfolio value increased ~6% from $21.90B to $23.17B. The number of holdings increased from 38 to 40. The top three holdings are at ~25% while the top five are close to ~37% of the 13F assets: Microsoft, Philip Morris International, Stryker Corp, IDEXX Labs, and Estee Lauder.

Note: Their flagship Fundsmith Equity Fund (2010 inception) has returned 16% annualized compared to 11.1% for the MSCI World Index. Last year was their first down year since inception – negative 13.8%.

New Stakes:

Graco Inc. ( GGG ), Marriott International ( MAR ), and Mastercard Inc. ( MA ): These three very small (less than ~0.20% of the portfolio each) stakes were established this quarter.

Stake Disposals:

Adobe Inc. ( ADBE ) : the ADBE position was 3.24% of the portfolio purchased in Q1 2022 at prices between ~$412 and ~$564. The disposal this quarter was at prices between ~$321 and ~$392. The stock currently trades at ~$415. They realized losses.

Stake Increases:

Microsoft Corp. ( MSFT ) : MSFT is currently the largest position at 11.24% of the portfolio. The stake was built during the five-year period from 2013 to 2018 at prices between ~$27 and ~$115. There was a ~23% selling in Q1 2022 at prices between ~$276 and ~$335. The stock currently trades at ~$333. The last two quarters saw minor trimming while this quarter saw a marginal increase.

McCormick ( MKC ) : MKC is a sizable 5.56% of the portfolio position built during the 2018-19 timeframe at prices between ~$50 and ~$86. The time period since had also seen minor buying. There was an ~18% reduction in Q1 2022 at prices between ~$92 and ~$104. The stock currently trades at ~$87. The last four quarters saw only minor adjustments.

Note: they have a ~7.8% ownership stake in the business.

Visa Inc. ( V ) : Visa is a 5.46% of the portfolio position established over the last decade through consistent buying in most years. The build-up happened at prices between ~$30 and ~$245. Q1 2022 saw an ~18% reduction at prices between ~$191 and ~$235. The stock currently trades at ~$225. The last four quarters have seen only minor adjustments.

Automatic Data Processing ( ADP ) : The 2013-19 timeframe saw consistent buying in ADP at prices between ~$52 and ~$173. Q1 2020 saw a ~40% reduction at prices between ~$112 and ~$181 while in the next quarter there was a ~70% increase at prices between ~$128 and ~$160. Since then, the activity has been minor. Q1 2022 saw a ~22% reduction at prices between ~$196 and ~$245. The stock is now at ~$212 and the stake is at ~5.32% of the portfolio. The last four quarters have seen only minor adjustments.

PepsiCo ( PEP ) : The 5.24% PEP stake was built over the last decade through consistent buying during most quarters. The buying happened at prices between ~$65 and ~$170. There was a ~25% reduction in Q1 2022 at prices between ~$154 and ~$176. The stock is now at ~$184. Last quarter saw a ~7% trimming while this quarter there was a marginal increase.

Meta Platforms ( META ) : The 5.18% META stake was built in 2018 at prices between ~$125 and ~$210. The stake remained steady since, although adjustments were made in most quarters. There was a ~20% reduction in Q1 2022 at prices between ~$187 and ~$339. The stock currently trades at ~$262. The last four quarters have seen only minor adjustments.

Waters Corp. ( WAT ) : WAT is a ~5% of the portfolio stake built during the 2015-2017 timeframe at prices between ~$115 and ~$200. The next two years also saw incremental buying. There was a ~23% selling in H1 2020 at prices between ~$175 and ~$240. Since then, the activity has been minor. There was a ~18% reduction in Q1 2022 at prices between ~$307 and ~$365. The stock currently trades at ~$261. The last four quarters have seen only minor adjustments.

Note: they have a ~7.6% ownership stake in Waters Corp.

Mettler-Toledo ( MTD ) : The 3.71% MTD stake was purchased during H1 2022 at prices between ~$1098 and ~$1675 and the stock currently trades at ~$1348. The last few quarters saw only minor adjustments.

Alphabet Inc. ( GOOG ) ( GOOGL ) : GOOG is a 3.41% of the portfolio position purchased in Q4 2021 at prices between ~$133 and ~$151. There was a ~9% trimming next quarter. The stock currently trades below their purchase price range at ~$125. The last four quarters saw only minor adjustments.

Brown-Forman ( BF.B ) : BF.B is a 3.39% of the portfolio stake built in 2019 at prices between ~$45 and ~$68. 2021 saw a ~50% stake increase at prices between ~$67 and ~$81 while in Q1 2022 there was a ~28% selling at prices between ~$62 and ~$72. The stock is now at $61.58. The last few quarters saw only minor adjustments.

Note: They have a ~5% ownership stake in the business.

Church & Dwight ( CHD ) : The 3.22% CHD position was built during the three quarters through Q2 2021 at prices between ~$72 and ~$93. There was a ~28% selling in Q1 2022 at prices between ~$95 and ~$104. The stock currently trades at ~$94. The last four quarters have seen only minor adjustments.

Otis Worldwide ( OTIS ): OTIS is a 2.29% of the portfolio stake established during Q3 2022 at prices between ~$64 and ~$82 and the stock currently trades at the top of that range ~$82. The last two quarters saw only minor adjustments.

Apple Inc. ( AAPL ) and Procter & Gamble ( PG ): AAPL is a ~1% of the portfolio position built this quarter at prices between ~$125 and ~$166 and the stock currently trades above that range at ~$175. The 1.10% PG stake was built at prices between ~$137 and ~$154 and it now goes for ~$145.

Home Depot ( HD ), Johnson & Johnson ( JNJ ), and Zoetis Inc. ( ZTS ): These very small (less than ~0.20% of the portfolio each) positions were increased this quarter.

Stake Decreases:

Philip Morris International ( PM ) : The 6.91% PM stake was established during the last decade through consistent buying every quarter. Pricing ranged between ~$60 and ~$120. Q1 2022 saw a ~20% reduction at prices between ~$89 and ~$112. The stock is now at ~$91. The last four quarters have seen only minor adjustments.

Stryker Corp. ( SYK ) : SYK is a 6.77% of the portfolio position purchased during the last decade through consistent buying every quarter at prices between ~$50 and ~$275. There was a ~20% reduction in Q1 2022 at prices between ~$245 and ~$278. The stock currently trades at ~$273. The last four quarters have seen only minor adjustments.

IDEXX Labs ( IDXX ) : IDXX is a 6.37% of the portfolio position established during the 2015-16 timeframe at prices between ~$63 and ~$120. Since then, the position has remained relatively steady although adjustments were made in most quarters. There was a ~15% trimming in Q1 2022 at prices between ~$466 and ~$631. That was followed with a similar reduction this quarter at prices between ~$406 and ~$515. The stock currently trades at ~$469.

Note: They have a ~4.5% ownership stake in the business.

Estee Lauder ( EL ) : The 5.77% EL stake was established in 2016 at prices between ~$75 and ~$95. 2018 saw a two-thirds stake increase at prices between ~$125 and ~$158. Since then, the activity has been minor. There was a ~20% selling in Q1 2022 at prices between ~$250 and ~$372. The stock currently trades at ~$194. The last few quarters have seen minor trimming.

Kept Steady:

Nike Inc. ( NKE ) : The 3.56% NKE stake was built in H1 2020 at prices between ~$67 and ~$105. There was minor buying in most quarters since. Q1 2022 saw a ~23% reduction at prices between ~$118 and ~$166. The stock is now at ~$108.

Amazon.com Inc. ( AMZN ) : The ~3% AMZN stake was built in H2 2021 at prices between ~$160 and ~$186. Next quarter saw a ~20% selling at prices between ~$136 and ~$170. The stock is now below their purchase price ranges at ~$120.

Cognex ( CGNX ), Edwards Lifesciences ( EW ), Equifax Inc. ( EFX ), Fortinet Inc. ( FTNT ), IDEX ( IEX ), IPG Photonics ( IPGP ), Masimo ( MASI ), MSCI Inc. ( MSCI ), Paycom Software ( PAYC ), Qualys Inc. ( QLYS ), Rollins Inc. ( ROL ), Sabre Corp. ( SABR ), VeriSign Inc. ( VRSN ), and Verisk Analytics ( VRSK ): These very small (less than ~0.70% of the portfolio each) stakes were kept steady this quarter.

Note: they have a ~7% ownership stake in Sabre Corp.

The spreadsheet below highlights changes to Fundsmith’s 13F holdings in Q1 2023:

Source: John Vincent. Data constructed from Fundsmith’s 13F filings for Q4 2022 and Q1 2023.

For further details see: