OTIS - Tracking Terry Smith's Fundsmith 13F Portfolio - Q3 2023 Update

2023-11-27 03:14:01 ET

Summary

• Fundsmith's 13F portfolio value decreased by 8% to $22 billion in Q3 2023.
• The top three holdings in the portfolio are Microsoft, Stryker Corp, and Meta Platforms.
• New stakes were established in McDonald's and Oddity Tech, while stake disposals were made in Estee Lauder and Masimo Corporation.

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 11/14/2023. 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 Q2 2023.

This quarter, Fundsmith’s 13F portfolio value decreased ~8% from $23.83B to $22B. The number of holdings remained steady at 39. The top three holdings are at ~26% while the top five are close to ~38% of the 13F assets: Microsoft, Stryker Corp., Meta Platforms, Philip Morris International, and Automatic Data Processing.

Note: Their flagship Fundsmith Equity Fund (2010 inception) has returned 14.8% annualized compared to 10.8% for the MSCI World Index. Last year was their first down year since inception - negative 13.8%. The following top holdings are not in the 13F report: Novo Nordisk (NVO), L’Oreal (LRLCF), and LVMH Moet Hennessy - Louis Vuitton (LVMUY).

New Stakes:

McDonald's ( MCD ) and Oddity Tech (ODD): The very small 0.11% MCD position was established at prices between ~$263 and ~$296. The stock is now at ~$283. ODD is a very small 0.07% stake established at prices between ~$26 and ~$55 and it is now at $34.38.

Stake Disposals:

Estee Lauder ( EL ) : The 4.46% 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. Recent activity follows. There was a ~20% selling in Q1 2022 at prices between ~$250 and ~$372. The stake was disposed this quarter at prices between ~$140 and ~$197. The stock currently trades at ~$124.

Masimo Corporation ( MASI ) : The very small 0.50% stake in MASI was disposed during the quarter.

Stake Increases:

Stryker Corporation ( SYK ) : SYK is a ~7% 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 ~$294. The last six quarters have seen only minor adjustments. There was a marginal increase this quarter.

IDEXX Laboratories ( IDXX ) : IDXX is a 5.89% of the portfolio position established during the 2015-16 timeframe at prices between ~$63 and ~$120. Since then, the position 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 by a similar reduction during Q1 2023 at prices between ~$406 and ~$515. The stock currently trades at ~$478. There was a marginal increase over the last two quarters.

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

Marriott International ( MAR ) : The ~4% stake in MAR was primarily built this quarter at prices between ~$182 and ~$208. The stock currently trades just above that range at ~$209.

Church & Dwight Co., Inc. ( CHD ) : The ~3% 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. That was followed by a ~20% reduction last quarter at prices between ~$88 and ~$100. The stock currently trades at ~$95. This quarter saw a ~9% increase.

Fortinet, Inc. ( FTNT ) : The small 1.31% stake in FTNT was more than doubled this quarter at prices between ~$57 and ~$80. The stock is now below that range at $53.43.

Apple Inc. ( AAPL ) : AAPL is a ~1% of the portfolio position built during Q1 2023 at prices between ~$125 and ~$166 and the stock currently trades above that range at ~$190. The last two quarters saw only minor adjustments.

Home Depot (HD), Johnson & Johnson (JNJ), Mastercard Incorporated (MA), and Zoetis Inc. (ZTS): These small (less than ~0.20% of the portfolio each) stakes were increased during the quarter.

Stake Decreases:

Microsoft Corporation ( MSFT ) : MSFT is currently the largest position at 12.41% 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 ~$377. The last few quarters have seen minor trimming.

Meta Platforms ( META ) : The 6.83% 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. That was followed by a ~11% selling this quarter at prices between ~$283 and ~$326. The stock currently trades at ~$338.

Philip Morris International ( PM ) : The 6.34% PM stake was established during the last decade through consistent buying every quarter. Pricing ranged between ~$60 and ~$120. Q1 2022 saw a ~20% selling at prices between ~$89 and ~$112. The stock is now at $94.34. The last several quarters have seen minor trimming.

Automatic Data Processing ( ADP ) : The 2013-19 timeframe saw consistent buying in ADP at prices between ~$52 and ~$173. Q1 2020 saw a ~40% selling 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 had been minor. Q1 2022 saw a ~22% reduction at prices between ~$196 and ~$245. The stock is now at ~$231 and the stake is at ~6% of the portfolio. The last six quarters have seen only minor adjustments.

Visa Inc. ( V ) : Visa is a ~6% 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 a ~18% selling at prices between ~$191 and ~$235. The stock currently trades at ~$254. The last several quarters have seen only minor adjustments.

McCormick & Company, Incorporated ( MKC ) : MKC is a large 5.26% of the portfolio position built during the 2018-19 timeframe at prices between ~$50 and ~$86. There was a ~18% reduction in Q1 2022 at prices between ~$92 and ~$104. The stock currently trades at $66.44. The last six quarters saw only minor adjustments.

Note: they have a ~7.7% ownership stake in the business.

PepsiCo ( PEP ) : The 5.11% 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 ~$169. Q4 2022 saw a ~7% trimming while the last three quarters saw only minor adjustments.

Waters Corporation ( WAT ) : WAT is a 4.74% of the portfolio stake built during the 2015-2017 timeframe at prices between ~$115 and ~$200. 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 had been minor. There was a ~18% reduction in Q1 2022 at prices between ~$307 and ~$365. The stock currently trades at ~$280. The last several quarters have seen only minor adjustments.

Note: they have a ~7.7% ownership stake in Waters Corp.

Alphabet Inc. ( GOOG ) ( GOOGL ) : GOOG is a 4.51% 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 at ~$138. The last several quarters saw only minor adjustments.

Procter & Gamble ( PG ) : The 3.21% PG stake was built during Q1 2023 at prices between ~$137 and ~$154 and it now goes for ~$151. There was a ~180% stake increase last quarter at prices between ~$143 and ~$157. There was marginal trimming this quarter.

Brown-Forman ( BF.B ) : BF.B is a 3.17% 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 $59.75. The last several quarters saw only minor adjustments.

Note: They have a ~4.9% ownership stake in the business.

NIKE, Inc. ( NKE ) : The 2.91% 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. The last several quarters saw only minor adjustments.

Mettler-Toledo ( MTD ) : The 2.86% MTD stake was purchased during H1 2022 at prices between ~$1098 and ~$1675 and the stock currently trades at ~$1094. The last few quarters saw only minor adjustments.

Otis Worldwide ( OTIS ) : OTIS is a 2.35% of the portfolio stake established during Q3 2022 at prices between ~$64 and ~$82 and the stock currently trades at ~$85. The last few quarters saw only minor adjustments.

Cognex Corporation (CGNX), Exponent, Inc. (EXPO), Equifax Inc. (EFX), Graco Inc. (GGG), IDEX Corporation (IEX), IPG Photonics (IPGP), MSCI Inc. (MSCI), Paycom Software (PAYC), Qualys, Inc. (QLYS), Rollins, Inc. (ROL), Sabre Corporation (SABR), VeriSign, Inc. (VRSN), and Verisk Analytics (VRSK): These very small (less than ~1% of the portfolio each) stakes were decreased during the quarter.

The spreadsheet below highlights changes to Fundsmith’s 13F holdings in Q3 2023:

Source: John Vincent. Data constructed from Fundsmith’s 13F filings for Q2 2023 and Q3 2023.

For further details see: