Here’s Why Fundsmith Chose to Keep its Unilever (UL) Stake

Fundsmith LLP, an investment management firm, published its “Fundsmith Equity Fund” fourth-quarter 2021 investor letter – a copy of which can be downloaded here. The T Class Accumulation shares, the most commonly held share class, rose by +22.1% in 2021 and compares with a rise of +22.9% for the MSCI World Index in sterling with dividends reinvested. The Fund marginally underperformed this comparator in 2021 but is still the best performer since its inception in November 2010 in the Investment Association Global sector with a return 357 percentage points above the sector average which has delivered just +213.9% over the same timeframe. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Fundsmith Equity Fund, in its Q4 2021 investor letter, mentioned Unilever PLC (NYSE: UL) and discussed its stance on the firm. Unilever PLC is a London, England‎-based multinational consumer goods company with a $137.7 billion market capitalization. UL delivered a -0.20% return since the beginning of the year, while its 12-month returns are down by -10.2%. The stock closed at $53.68 per share on January 13, 2022.

Here is what Fundsmith Equity Fund has to say about Unilever PLC in its Q4 2021 investor letter:

Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business. The most obvious manifestation of this is the public spat it has become embroiled in over the refusal to supply Ben & Jerry’s ice cream in the West Bank. However, we think there are far more ludicrous examples which illustrate the problem. A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert — salads and sandwiches). Although Unilever had by far the worst performance of our consumer staples stocks during the pandemic we continue to hold the shares because we think that its strong brands and distribution will triumph in the end.”

Our calculations show that Unilever PLC (NYSE: UL) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. UL was in 17 hedge fund portfolios at the end of the third quarter of 2021, compared to 19 funds in the previous quarter. Unilever PLC (NYSE: UL) delivered a 1.02% return in the past 3 months.

In August 2021, we also shared another hedge fund’s views on UL in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.