"Britain's Warren Buffett" Pared Down Every Single Stock in His Nearly $13 Billion Portfolio in the First Quarter, With One Exception

Fundsmith’s Terry Smith cut risk as the market looked expensive: he pared down or exited all 37 Fundsmith positions from end-December to end-March, reducing 33 holdings after completely exiting 4, while managing $17.1B across the portfolio. The only new buy in 2026 was Badger Meter (BMI), adding 142,491 shares worth $21.7M by March-end—trading at a forward P/E of 28, about a 33% discount to its trailing five-year average—citing upside from water utility infrastructure upgrades and recurring SaaS analytics revenue.

Analysis

The real signal here is not celebrity ownership; it’s that a defensive, mission-critical infrastructure name is still getting institutional capital in a market where quality is scarce. BMI’s appeal is that a larger share of its value is now coming from recurring analytics/software and replacement cycles rather than one-off hardware sales, which supports a premium multiple even if top-line growth normalizes. That makes the stock more resilient than the average industrial, but it also means the market can quickly overpay for “bond-like growth” if rates stop falling.

Second-order, the read-through is slightly negative for commoditized meter peers and other low-differentiation utility suppliers: if capital is flowing toward companies with software attach rates and installed-base monetization, the market will increasingly discriminate between true platform names and plain-vanilla hardware vendors. In the water bucket, that favors BMI over broader, more cyclical infrastructure proxies and should keep pressure on peers that lack recurring revenue or operating leverage. The bigger macro risk is municipal capex delay if financing costs stay elevated; that would show up first in order timing, not backlog headlines.

Contrarian take: the consensus may be overpricing the signal from a stale 13F and underpricing execution risk in a premium multiple. This is not a “chase after Buffett-style buying” setup; it is a wait-for-confirmation setup where the burden is on recurring revenue growth and margin durability, not just a respected allocator’s interest. If BMI fails to show Beacon mix expansion or re-acceleration in utility ordering over the next 1-2 quarters, the valuation support likely compresses fast.

Key Decisions for Investors

• Long BMI on pullbacks, 3-6 month horizon, as a quality compounder; target holding through the next print if recurring revenue/margin trends remain intact. Risk/reward is favorable only if the stock stays below ~30x forward P/E; above that, upside becomes multiple-dependent.
• Pair trade: long BMI / short XLI for 1-3 months if you want a cleaner expression of defensive, recurring-revenue infrastructure versus cyclical industrial beta. Thesis fails if industrial PMIs reaccelerate or BMI backlog/order cadence softens.
• Watchlist, not a recommendation: BMI if utility capex and Beacon adoption are confirmed in the next earnings call. Missing data: software mix, installed-base churn, and municipal order timing; without those, the 13F is just sentiment, not fundamentals.
• Avoid chasing BRK.B on succession noise alone; the article is not a fundamental catalyst. Treat any weakness or strength in BRK.B as portfolio-level flow, not an edge, unless there is evidence of a broader re-rating in Berkshire’s insurance/energy mix.