INTU - Tracking Terry Smith's Fundsmith 13F Portfolio - Q4 2022 Update

2023-04-10 10:10:26 ET

Summary

• Fundsmith’s 13F portfolio value increased from $21.07B to $21.90B this quarter.
• They dropped Intuit and PayPal Holdings during the quarter.
• The top three positions are Microsoft, Philip Morris International, and Estee Lauder, and they add up to ~24% of the portfolio.

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 2/14/2023. 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 Q3 2022.

This quarter, Fundsmith’s 13F portfolio value increased ~4% from $21.07B to $21.90B. The number of holdings decreased from 46 to 38. The top three holdings are at ~24% while the top five are close to ~37% of the 13F assets: Microsoft, Philip Morris International, Estee Lauder, IDEXX Labs, and Stryker Corp.

Note: Their flagship Fundsmith Equity Fund (2010 inception) has returned 15.8% annualized compared to 11.2% for the MSCI World Index through 3/31/2023. However, last year they had the first negative return since inception – negative 13.8%.

Stake Disposals:

Intuit Inc. ( INTU ) : INTU was a ~3% of the portfolio stake built during the 2017-18 timeframe at prices between ~$115 and ~$225. The last four quarters saw a ~63% reduction at prices between ~$353 and ~$692. The disposal this quarter was at prices between ~$361 and ~$432. The stock currently trades at ~$447.

PayPal Holdings ( PYPL ) : The bulk of the 2.29% PYPL position was built in the 2015-16 timeframe at prices between ~$32 and ~$44. The next two years saw incremental buying and since then the position had been kept relatively steady. There was a ~57% reduction in the last three quarters at prices between ~$70 and ~$195. The elimination this quarter was at prices between ~$68 and ~$91. The stock currently trades at ~$75.

Ansys Inc. (ANSS), Genpact Ltd. (G), MercadoLibre (MELI), Taiwan Semi (TSM), WNS Holdings (WNS), and XP Class A: These minutely small (less than ~0.1% of the portfolio each) stakes were disposed this quarter.

Stake Increases:

Apple Inc. (AAPL), Home Depot (HD), Idexx (IDXX), Johnson & Johnson (JNJ), Procter & Gamble (PG), and Zoetis Inc. (ZTS): These very small (less than ~0.30% of the portfolio each) positions were increased this quarter.

Stake Decreases:

Microsoft Corp. ( MSFT ) : MSFT is currently the largest position at ~10% of the portfolio. The stake was built during the five-year period from 2013 to 2018 at prices between ~$27 and ~$115. Since then, the activity had been minor. There was a ~23% selling in Q1 2022 at prices between ~$276 and ~$335. The stock currently trades at ~$292. The last two quarters saw minor trimming.

Philip Morris International ( PM ) : The 7.62% 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 ~$99. The last three quarters have seen only minor adjustments.

Estee Lauder ( EL ) : The top three 6.44% 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 had been minor. There was a ~20% selling in Q1 2022 at prices between ~$250 and ~$372. The stock currently trades at ~$241. The last three quarters have seen only minor adjustments.

IDEXX Labs (IDXX) : IDXX is a 6.42% of the portfolio position established during the 2015-16 timeframe at prices between ~$63 and ~$120. Since then, the position had remained relatively steady although adjustments were made in most quarters. There was a ~15% trimming in Q1 2022 at prices between ~$466 and ~$631. The stock currently trades at ~$473. The last three quarters have seen only minor adjustments.

Note: They have a ~5.3% ownership stake in the business.

Stryker Corp. ( SYK ) : SYK is a 6.26% 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 ~$288. The last three 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% 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 ~$216 and the stake is at ~6% of the portfolio. The last three quarters have seen only minor adjustments.

McCormick ( MKC ) : MKC is a large 5.87% 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 a ~18% reduction in Q1 2022 at prices between ~$92 and ~$104. The stock currently trades at ~$85.80. The last three quarters saw only minor adjustments.

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

Waters Corp. ( WAT ) : WAT is a 5.77% 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 ~$300. The last three quarters have seen only minor adjustments.

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

PepsiCo ( PEP ) : The 5.49% 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. This quarter saw a ~7% trimming.

Visa Inc. ( V ) : Visa is a 5.33% 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 ~$226. The last three quarters have seen only minor adjustments.

Mettler-Toledo ( MTD ) : The 3.70% MTD stake was purchased during H1 2022 at prices between ~$1098 and ~$1675 and the stock currently trades at ~$1501. Last quarter saw a ~4% further increase while this quarter saw marginal trimming.

Brown-Forman ( BF.B ) : BF.B is a 3.64% 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 $62.66. There was marginal trimming this quarter.

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

Nike Inc. ( NKE ) : The 3.59% 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 ~$120. The last three quarters saw only minor adjustments.

Adobe Inc. ( ADBE ) : ADBE is a 3.24% of the portfolio position purchased in Q1 2022 at prices between ~$412 and ~$564 and the stock currently trades below that range at ~$381. Q2 2022 saw a ~10% stake increase while this quarter saw marginal trimming.

Church & Dwight (CHD) : The 3.11% 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 $90.61. The last three quarters have seen only minor adjustments.

Alphabet Inc. (GOOG) (GOOGL) : GOOG is a 3.07% 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 well below their purchase price range at ~$109. The last three quarters saw only minor adjustments.

Meta Platforms ( META ) : The ~3% 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 ~$216. The last three quarters have seen only minor adjustments.

Amazon.com Inc. ( AMZN ) : The 2.60% 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 well below their purchase price range at ~$102. The last three quarters have seen only minor adjustments.

Otis Worldwide (OTIS): OTIS is a 2.25% of the portfolio stake established last quarter at prices between ~$64 and ~$82 and the stock currently trades at $78.49. There was marginal trimming this quarter.

Cognex (CGNX), Equifax Inc. (EFX), Fortinet Inc. (FTNT), 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 ~0.50% of the portfolio each) positions were decreased this quarter.

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

Kept Steady:

Edwards Lifesciences (EW): The minutely small EW stake was kept steady this quarter.

The spreadsheet below highlights changes to Fundsmith’s 13F holdings in Q4 2022:

Source: John Vincent. Data constructed from Fundsmith’s 13F filings for Q3 2022 and Q4 2022.

For further details see: