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Bulldog Drummond
Posted: 06 July 2021 15:35:45(UTC)
#299

Joined: 03/10/2017(UTC)
Posts: 6,253
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.
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Frank Marquis
Posted: 06 July 2021 16:11:22(UTC)
#300

Joined: 14/12/2012(UTC)
Posts: 104
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.


What should be the maximum percentage of a company they own in your opinion?
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Bulldog Drummond
Posted: 06 July 2021 16:22:05(UTC)
#301

Joined: 03/10/2017(UTC)
Posts: 6,253
Frank Marquis;176049 wrote:
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.


What should be the maximum percentage of a company they own in your opinion?


No strong views on that. Last time I looked at Hansa, half of it was in a shipping company. SMT was I think 6 months ago 10% in Tesla. There's another IT which is I think 100% in Barclays. So I'm generally relaxed about concentration, but in FS I can't see any diversification, so it looks rather like 100% concentration. That might or might not be a good thing.

But however entrancing it is to wander unchecked through a garden of bright images, are we not enticing your mind from another subject of almost equal importance? I would be equally interested in your thoughts about the other points I mentioned, i.e. boxed into quality, expensive, mega-cap, US focus.
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Joe Soap
Posted: 06 July 2021 16:25:00(UTC)
#319

Joined: 24/01/2010(UTC)
Posts: 2,157
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.

No doubt my response will be inadequate in some way. But I will have a go. I actually trust Smith and his team to manage the risk for me. I am not at all sure FS is hamstrung by it's processes. The back testing of the portfolio goes back several decades and the average age of the companies in the portfolio (I think) is over a 100 years old. They must be doing something right. I don't, yet at least, see anything to suggest the wheels are about to fall off the strategy adopted by Smith. You may be right. We will see soon enough. Despite my optimism, I maintain a close watch at what's going on at FS.
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D Bergman
Posted: 06 July 2021 16:25:10(UTC)
#318

Joined: 22/03/2018(UTC)
Posts: 1,308

Thanks: 1684 times
Was thanked: 3536 time(s) in 1035 post(s)
[quote=Bulldog Drummond;
But however entrancing it is to wander unchecked through a garden of bright images, are we not enticing your mind from another subject of almost equal importance?

[/quote]

Kai Lung or Lord Peter Wimsey?
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1 user thanked D Bergman for this post.
Bulldog Drummond on 06/07/2021(UTC)
Frank Marquis
Posted: 06 July 2021 16:34:52(UTC)
#304

Joined: 14/12/2012(UTC)
Posts: 104
Bulldog Drummond;176052 wrote:
Frank Marquis;176049 wrote:
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.


What should be the maximum percentage of a company they own in your opinion?


No strong views on that. Last time I looked at Hansa, half of it was in a shipping company. SMT was I think 6 months ago 10% in Tesla. There's another IT which is I think 100% in Barclays. So I'm generally relaxed about concentration, but in FS I can't see any diversification, so it looks rather like 100% concentration. That might or might not be a good thing.

But however entrancing it is to wander unchecked through a garden of bright images, are we not enticing your mind from another subject of almost equal importance? I would be equally interested in your thoughts about the other points I mentioned, i.e. boxed into quality, expensive, mega-cap, US focus.


Not my question - how much of a company do you think they can own sensibly? % wise from a liquidity standpoint? Not how much concentration in the fund. Once you answer that I'll answer your question, again not sure the snark is necessary.
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Joe Soap
Posted: 06 July 2021 16:54:54(UTC)
#305

Joined: 24/01/2010(UTC)
Posts: 2,157
Frank Marquis;176059 wrote:
Bulldog Drummond;176052 wrote:
Frank Marquis;176049 wrote:
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.


What should be the maximum percentage of a company they own in your opinion?


No strong views on that. Last time I looked at Hansa, half of it was in a shipping company. SMT was I think 6 months ago 10% in Tesla. There's another IT which is I think 100% in Barclays. So I'm generally relaxed about concentration, but in FS I can't see any diversification, so it looks rather like 100% concentration. That might or might not be a good thing.

But however entrancing it is to wander unchecked through a garden of bright images, are we not enticing your mind from another subject of almost equal importance? I would be equally interested in your thoughts about the other points I mentioned, i.e. boxed into quality, expensive, mega-cap, US focus.


Not my question - how much of a company do you think they can own sensibly? % wise from a liquidity standpoint? Not how much concentration in the fund. Once you answer that I'll answer your question, again not sure the snark is necessary.

With respect, I think I am a lot more interested in what Smith has to say about liquidity and size of investment in individual companies. He has explained this many times in public.
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1 user thanked Joe Soap for this post.
Frank Marquis on 06/07/2021(UTC)
Jim S
Posted: 06 July 2021 17:00:38(UTC)
#303

Joined: 08/12/2016(UTC)
Posts: 530
Bulldog Drummond;176052 wrote:

There's another IT which is I think 100% in Barclays.


I do admire a high conviction approach but even my wondering is unchecked on this one
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Frank Marquis
Posted: 06 July 2021 17:16:40(UTC)
#306

Joined: 14/12/2012(UTC)
Posts: 104
Joe Soap;176064 wrote:
Frank Marquis;176059 wrote:
Bulldog Drummond;176052 wrote:
Frank Marquis;176049 wrote:
Bulldog Drummond;176035 wrote:
Frank Marquis;176014 wrote:


The whole ethos of the fund is to buy high quality companies and do nothing, I'm not sure it's such a cutting criticism to blame them for investing in-line with their mandate. Terry Smith has highlighted the re-rating (and its transitory nature) constantly. Furthermore if re-rating is the issue I look forward to you banging that drum on every BG thread.


If it comes to BG, I sold, rightly or wrongly, my SMT, American and Discovery early this year, and posted that at the time. My question about FS is not so much as the re-rating (which is an historic fact) but about the very narrow and now potentially high-risk box (quality, expensive, mega-cap, US focus, high concentration) into which the fund is now penned and unable to escape, a question that I notice no one here seems inclined to address.


What should be the maximum percentage of a company they own in your opinion?


No strong views on that. Last time I looked at Hansa, half of it was in a shipping company. SMT was I think 6 months ago 10% in Tesla. There's another IT which is I think 100% in Barclays. So I'm generally relaxed about concentration, but in FS I can't see any diversification, so it looks rather like 100% concentration. That might or might not be a good thing.

But however entrancing it is to wander unchecked through a garden of bright images, are we not enticing your mind from another subject of almost equal importance? I would be equally interested in your thoughts about the other points I mentioned, i.e. boxed into quality, expensive, mega-cap, US focus.


Not my question - how much of a company do you think they can own sensibly? % wise from a liquidity standpoint? Not how much concentration in the fund. Once you answer that I'll answer your question, again not sure the snark is necessary.

With respect, I think I am a lot more interested in what Smith has to say about liquidity and size of investment in individual companies. He has explained this many times in public.


I don't have an issue with the fund's liquidity but not sure I love the answer on this - it's always about average market cap, average is hugely skewed by MSFT @$2tn and FB @$1tn.
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Bulldog Drummond
Posted: 06 July 2021 17:49:37(UTC)
#309

Joined: 03/10/2017(UTC)
Posts: 6,253
Frank Marquis;176059 wrote:


Not my question - how much of a company do you think they can own sensibly? % wise from a liquidity standpoint? Not how much concentration in the fund. Once you answer that I'll answer your question, again not sure the snark is necessary.


This seems a bit of a red herring, and avoiding the question. I have never questioned the liquidity of FS.
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