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We Study Billionaires - The Investor’s Podcast Network

TIP526: Quality Investing: Lessons from Terry Smith

Feb 21, 2023
Terry Smith, founder and CEO of Fundsmith, shares his wisdom on quality investing and long-term success, often hailed as the 'Warren Buffett of Great Britain.' He emphasizes the importance of owning high-quality companies and prudent valuation, drawing on a robust screening process to avoid poor investments. The conversation highlights challenges with stock-based compensation at firms like Unilever and PayPal, and why macroeconomic views should not sway those focused on quality. Smith's current top equity holdings offer a glimpse into his investment strategy.
55:55

Episode guests

Terry Smith

Podcast summary created with Snipd AI

Quick takeaways

  • Focus on buying good companies with high returns on capital for market outperformance.
  • Avoid overpayment and prioritize quality over cheap valuations when investing in businesses.

Deep dives

Terry Smith's Investment Philosophy and Success

Terry Smith, the founder and CEO of Fundsmith, has achieved impressive market outperformance by following a three-point strategy. He focuses on buying good companies with high returns on capital, avoiding overpayment, and maintaining a 'do nothing' approach. Smith's clear-sighted investment style emphasizes quality over cheap valuations, leading to the success of his portfolio.

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