Terry Smith, chief executive, Fundsmith
Running a £20bn fund doesn’t guarantee good treatment from the companies you invest in, as Terry Smith, the manager of the Fundsmith Equity Fund, has found. When Amadeus, the Spanish company that provides booking software for airlines and other travel providers, raised €1.5bn to help see it through the coronavirus crisis by issuing new shares and convertible bonds at the start of April, Fundsmith wasn’t asked to take part in the fundraising, Smith tells Sky News.
Small investors are used to their pre-emption rights – the principle that existing shareholders should have first refusal when companies issue new shares – being ignored. But most people would have expected a fund as large as Fundsmith to be included: it’s Amadeus’s fifth-largest shareholder and has been invested for seven years, says Smith. But “they never even bothered to call us and neither did anyone acting for them”. Fundsmith is now re-evaluating whether to keep the stock, he suggested. “When they make bad decisions of that sort, it undermines our confidence in them.”
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, the crisis has created other opportunities for Smith, who invested in sportswear giant Nike and coffee chain Starbucks after the two firms had seen their shares fall almost 40%. “They are both good businesses that we have long wanted to own and we thought we had an opportunity there.” He also sold Clorox, which makes cleaning products, having bought it just four months ago, after its share price rose by almost 30% in the first four months of the year.
-
UK-US trade deal announced: US cuts tariffs on UK car imports to 10%Keir Starmer and Donald Trump have announced a UK-US trade deal, but the US president has refused to lift baseline tariffs on most UK goods. What does it mean for the UK?
-
How to use mid-caps to diversify from the USMedium sized companies are overlooked by investors but could offer an attractive ‘sweet spot’. We consider the case for mid-caps amid market volatility.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
