Billionaire Investor Terry Smith's Hedge Fund Invests 31% in 3 Exceptional Stocks

Terry Smith, known as "the English Warren Buffett," has 31% of his hedge fund's portfolio invested in three exceptional stocks: Meta Platforms, which accounts for 11.25% of assets, and two other companies not specified. Smith's investment style echoes Buffett's, focusing on good companies with strong market share, profitability, and product development. Fundsmith has returned 607.3% for investors since its inception in 2010, outperforming the MSCI World Index.

Terry Smith, dubbed "the English Warren Buffett," has demonstrated a remarkable track record of outperforming the market with his investment strategy. Fundsmith, his hedge fund, has returned 607.3% for investors since its inception in 2010, significantly outperforming the MSCI World Index's 403.4% return over the same period [1].

Smith's investment style is heavily influenced by Warren Buffett, focusing on good companies with strong market share, profitability, and product development. Fundsmith's portfolio is heavily concentrated, with 31% of its assets invested in three exceptional stocks: Meta Platforms (META), Microsoft (MSFT), and Stryker (SYK).

Meta Platforms, formerly known as Facebook, accounts for 11.25% of Fundsmith's assets. Smith established a position in 2018, drawn to the company's high margin, return on capital, and revenue growth. Despite heavy spending on AI development, Meta's free cash flow has continued to grow, and its stock valuation remains appealing [1].

Microsoft (MSFT), another top holding, accounts for 11.25% of the portfolio. Smith first bought shares in 2011, and the company has since transformed into a cloud computing and AI juggernaut. Microsoft Azure, one of the leading public cloud platforms, drives the company's revenue growth. AI is a key growth driver, with Azure AI services and Copilot solutions generating significant demand and revenue growth [1].

Stryker (SYK), a medical device maker, has been a consistent performer for Fundsmith since its inception. Smith's high exposure to Stryker has paid off handsomely, with the stock up 666% since 2010. The company's broad portfolio of equipment beyond orthopedics, high switching costs, and strong competitive positioning are key drivers of its growth [1].

Smith's focus on good companies with strong market share, profitability, and product development has led to impressive returns for Fundsmith investors. His investment style, heavily influenced by Warren Buffett, has proven successful in navigating the market and delivering exceptional performance.

References:
[1] https://www.fool.com/investing/2025/05/10/billionaire-terry-smith-english-warren-buffett/