{"id":4607,"date":"2020-05-20T12:37:28","date_gmt":"2020-05-20T12:37:28","guid":{"rendered":"http:\/\/joapen.com\/blog\/?p=4607"},"modified":"2020-05-20T12:37:28","modified_gmt":"2020-05-20T12:37:28","slug":"fundsmith-annual-shareholder-meeting-2020","status":"publish","type":"post","link":"https:\/\/joapen.com\/blog\/2020\/05\/20\/fundsmith-annual-shareholder-meeting-2020\/","title":{"rendered":"Fundsmith annual shareholder meeting 2020"},"content":{"rendered":"<p>I discovered this shareholders meeting last year and I was willing to review it in detail. Below some notes.<\/p>\n<p>First 33 minutes is the formal presentation, after that Q&amp;A.<\/p>\n<p>The link to the letter to shareholders: <a href=\"https:\/\/www.fundsmith.co.uk\/docs\/default-source\/analysis---annual-letters\/annual-letter-to-shareholders-2019.pdf?sfvrsn=6\">https:\/\/www.fundsmith.co.uk\/docs\/default-source\/analysis&#8212;annual-letters\/annual-letter-to-shareholders-2019.pdf?sfvrsn=6<\/a><\/p>\n<p><iframe loading=\"lazy\" title=\"FUNDSMITH Annual Shareholders&#039; Meeting 25th February 2020\" width=\"1200\" height=\"675\" src=\"https:\/\/www.youtube.com\/embed\/PZy9-4Z_4i8?start=2603&#038;feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<h1>Minute #10:<\/h1>\n<p>Why they sold 3M on the one hand, 3M sold its ceramic bulletproof business unit at a price of 1.1x sales and acquired Acelity, which was a private company, for 11x EBITDA. Acelitywas actually going public and according to the prospectus, the opening price was was going to be 15x EBITDA. When asked about the difference between 11 and 15, they claimed that they announced the multiple of 11 EBITDA for the expected synergies. Fundsmith interpreted this as a lie.<\/p>\n<p>In the shareholder letter: &#8220;we were acting on growing doubts about the current management\u2019s capital allocation decision&#8221;.<\/p>\n<h1>minute #37:<\/h1>\n<p>Sub-estimate the impact of Covid-19.<\/p>\n<h1>minute #48:<\/h1>\n<p>Replying about why they don&#8217;t buy Apple or Alphabet.<\/p>\n<p><span style=\"text-decoration: underline;\">About Google<\/span>: ROE in 2019 is about 17%, which is average. Capital allocation is poor: they acquire small potential companies that could become competence in some niche and they dissolve these projects.<\/p>\n<p><span style=\"text-decoration: underline;\">About Apple:<\/span> sales and cash flow are flat in the last 4 years and the stock price has tripled. They saw the same behavior in companies as Nokia.<\/p>\n<h1>Comment about Sortino Ratio Versus Sharpe Ratio<\/h1>\n<p><em>The Sortino ratio is an adaption of the Sharpe ratio, and in my view an improvement. Whereas the Sharpe ratio estimates risk by the variability of returns, the Sortino ratio takes into account only downside variability as it is not clear why we should be concerned about upside volatility (i.e. when our Fund goes up a lot) which mostly<\/em><br \/>\n<em>seems to be a cause for celebration.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I discovered this shareholders meeting last year and I was willing to review it in detail. Below some notes. First 33 minutes is the formal presentation, after that Q&amp;A. The link to the letter to shareholders: https:\/\/www.fundsmith.co.uk\/docs\/default-source\/analysis&#8212;annual-letters\/annual-letter-to-shareholders-2019.pdf?sfvrsn=6 Minute #10: Why they sold 3M on the one hand, 3M sold its ceramic bulletproof business unit at &#8230; <a title=\"Fundsmith annual shareholder meeting 2020\" class=\"read-more\" href=\"https:\/\/joapen.com\/blog\/2020\/05\/20\/fundsmith-annual-shareholder-meeting-2020\/\" aria-label=\"Read more about Fundsmith annual shareholder meeting 2020\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[105],"tags":[],"class_list":["post-4607","post","type-post","status-publish","format-standard","hentry","category-trading"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fundsmith annual shareholder meeting 2020 -<\/title>\n<meta name=\"description\" content=\"I discovered this shareholders meeting last year and I was willing to review it in detail. 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