Where to now for Smithson?

Prism

For what its worth the NAV drop was 22.67% which happened a few days after the big share price drop

Thrugelmir

With only 31 holdings (at the 30th April) in the fund. Performance is likely to test ones patience at times. 

Sailtheworld

aroominyork said:

bowlhead99 said:I'm not saying it didn't hold up well in this particular set of circumstances.

and I pointed out that if you strip out the the discount which affected a wide range of ITs over that week, Smithson held up very well compared to VWRL.

Buying trusts because they're at a discount is all well and good but it's a bet that you think the market has got the discount value wrong and will correct.

There are only two prices. The one you can buy at and the one you can sell at. Stripping out discounts is an exercise in delusion - you can't buy or sell the NAV.

aroominyork

Sailtheworld said:

aroominyork said:

bowlhead99 said:I'm not saying it didn't hold up well in this particular set of circumstances.

and I pointed out that if you strip out the the discount which affected a wide range of ITs over that week, Smithson held up very well compared to VWRL.

Buying trusts because they're at a discount is all well and good but it's a bet that you think the market has got the discount value wrong and will correct.

There are only two prices. The one you can buy at and the one you can sell at. Stripping out discounts is an exercise in delusion - you can't buy or sell the NAV.

You're missing the point, Sailtheworld. Bowlhead highlighted SSON's fall compared to VWRL as an example of the volatility of midcaps. I pointed out the data was from a week when many ITs - including large caps - took a quick and dramatic deep dive into discount territory. So he was comparing apples and pears: if VWRL was an IT rather than an ETF it would likely also have 'gone discount' and SSON would not appear to have performed worse. 

Sailtheworld

aroominyork said:

Sailtheworld said:

aroominyork said:

bowlhead99 said:I'm not saying it didn't hold up well in this particular set of circumstances.

and I pointed out that if you strip out the the discount which affected a wide range of ITs over that week, Smithson held up very well compared to VWRL.

Buying trusts because they're at a discount is all well and good but it's a bet that you think the market has got the discount value wrong and will correct.

There are only two prices. The one you can buy at and the one you can sell at. Stripping out discounts is an exercise in delusion - you can't buy or sell the NAV.

You're missing the point, Sailtheworld. Bowlhead highlighted SSON's fall compared to VWRL as an example of the volatility of midcaps. I pointed out the data was from a week when many ITs - including large caps - took a quick and dramatic deep dive into discount territory. So he was comparing apples and pears: if VWRL was an IT rather than an ETF it would likely also have 'gone discount' and SSON would not appear to have performed worse. 

Well sure if VWRL was an IT probably that would have happened and if my aunty had balls she'd be my uncle.

Of course, with hindsight, the discount dip proved to be short lived but that wasn't known at the time. The like for like comparison is the selling price. There's nothing else.

Moe_The_Bartender

The average market cap of the companies in which SSON invests is about £7bn. That's as much as half the companies in the FTSE100. Hardly small/mid caps. They are only small in relation to investments held by Fundsmith.

aroominyork

Sailtheworld said:

aroominyork said:

Sailtheworld said:

aroominyork said:

bowlhead99 said:I'm not saying it didn't hold up well in this particular set of circumstances.

and I pointed out that if you strip out the the discount which affected a wide range of ITs over that week, Smithson held up very well compared to VWRL.

Buying trusts because they're at a discount is all well and good but it's a bet that you think the market has got the discount value wrong and will correct.

There are only two prices. The one you can buy at and the one you can sell at. Stripping out discounts is an exercise in delusion - you can't buy or sell the NAV.

You're missing the point, Sailtheworld. Bowlhead highlighted SSON's fall compared to VWRL as an example of the volatility of midcaps. I pointed out the data was from a week when many ITs - including large caps - took a quick and dramatic deep dive into discount territory. So he was comparing apples and pears: if VWRL was an IT rather than an ETF it would likely also have 'gone discount' and SSON would not appear to have performed worse. 

Well sure if VWRL was an IT probably that would have happened and if my aunty had balls she'd be my uncle.

Of course, with hindsight, the discount dip proved to be short lived but that wasn't known at the time. The like for like comparison is the selling price. There's nothing else.

I'll try once more. 

Dunston says: "Being smaller companies focused, [Smithson] will be more volatile and would be expected to make more on the upside but suffer more on the downside."   

Bowlhead says: "Yes, as examples of recent crash for few weeks following 19 Feb:
VWRL (vanguard ftse all world) £74.07 to £ 55.56 (-25%)
IWFS (ishares MSCI world midcap equal weight) £29.71 to £19.80 (-34%)
SSON (smithson) £13.88 - £9.10 (-35%)" 

I say: SSON's underperformance against VWRL is not due to it being smaller companies focused; it's due to SSON being an IT and not an ETF since many ITs got heavily discounted for a couple of days". 

You say: "Meet me auntie, such a lovely man". I reply "But she's not a man" and you says "But if she had balls she would be."

bowlhead99

Moe_The_Bartender said:

The average market cap of the companies in which SSON invests is about £7bn. That's as much as half the companies in the FTSE100. Hardly small/mid caps. They are only small in relation to investments held by Fundsmith.

By end of April the average market cap of SSON's holdings was £7.9bn, call it $10bn. The average market cap of the 1800 companies in the FTSE Global Largecap index was over twice that, at $21bn. The average market cap of the companies held by Fundsmith Equity was $155bn.

Of course, 'average market cap' depends on what sort of average you're talking about. For FTSE Global Largecap, if you divide $37 trillion of marketcap by 1800 constituents, you get the mentioned $21bn average market cap. But half of those companies will be $5bn or smaller - it's the big ones like Apple and Google at the top which drag the average up. Likewise with SSON, the top ten has some bigger holdings like Dominos and Equifax at $18-22bn, Ansys and Verisk at $22-25bn,  but the other holdings among the 30 are often quite a lot smaller.

Generally what you could say is that when the world's biggest companies have a trillion dollars of equity, a fund investing in the $4-$25bn range (while still wanting solid companies with good operating performance) seems like it's playing in the small and midcap area.  The giants of the US stockmarket really skew it, as it's the only place with trillion dollar companies  - the average market cap of the top 10 companies in FTSE global all-cap ex-US is 'only' $200bn and the mean average in FTSE global all-cap ex-US is $3bn (median $0.5bn).   But SSON does include the US market in its remit (because many businesses with good global operating numbers are based there), and it's clearly not going to be able to make a portfolio entirely out of $0.5bn companies, as it needs to deploy $20-100m into each of its holdings to fill a $2bn fund.

Prism

Sailtheworld said:

Of course, with hindsight, the discount dip proved to be short lived but that wasn't known at the time. The like for like comparison is the selling price. There's nothing else.

Unless you buy or sell then the selling price is actually irrelevant too. Other than that tracking NAV is just as useful in an exercise to work out if a funds strategy has something going for it. When I am researching a trust I pay more attention to NAV than the price of the shares until I have come to a decision that I might want to buy it. In fact we could dismiss all of what has happened over the last few months except for those in drawdown maybe or those doing a bit of selling and buying to boost their return a bit

Prism

Moe_The_Bartender said:

The average market cap of the companies in which SSON invests is about £7bn. That's as much as half the companies in the FTSE100. Hardly small/mid caps. They are only small in relation to investments held by Fundsmith.

Or the FTSE 100 is full of mid caps?
The MCSI SMID currently ranges from $32bn down to $19m. Smithson tends to play in the upper areas of that range