AI summary and analysis
2023 semi-annual letter explains portfolio valuation, low turnover, selling Amazon, and why Fundsmith still prioritizes long-term free cash flow compounding.
Key points
- The letter disclosed that the portfolio free cash flow yield fell from the level at the end of 2022, indicating that the valuation safety margin has become thinner after the stock price rebounded.
- Selling Amazon was the most significant portfolio move, reflecting Fundsmith's reassessment of capital expenditures, business quality, and opportunity costs.
- Smith split the semi-annual fluctuations into two parts: fundamentals and valuation, reminding investors not to use stock prices alone to judge the quality of positions.
- Portfolio turnover is still low, indicating that selling Amazon is not the beginning of a frequent trading style, but a change in the logic of individual positions.
- This letter is suitable for stock pages associated with Amazon: it gives long-term investors public reasons to exit a high-quality but complex company.