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.
-
Saba Capital and Boaz Weinstein respond to investment trustsAs investment trust managers and industry experts accuse Saba of self-motivated opportunism, the hedge fund responds to specific "misleading claims" and sets out its stall
-
How to find top-quality companies with growing dividendsIan Mortimer, portfolio manager of Guinness Global Equity Income Fund, shares where he would put his money for sustainable and growing dividends
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How to find the best investment ideas that others will missFind the best investment ideas by observing trends and listening to anecdotes, says Max King
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
Has RIT Capital fallen out of favour?RIT Capital saw its discount soar amid weak returns, and investors remain sceptical of a turnaround
-
Why emerging markets are waiting for a weak dollarEmerging markets have had a better year but, like everything else, are still lagging far behind the US
