Billionaire Terry Smith, quot;the English Warren Buffett,quot; Is Selling Meta Platforms and Microsoft and Buying This Stock That's Trouncing the Market in 2025

Fundsmith, led by Terry Smith, trimmed its holdings in Meta Platforms and Microsoft during Q1 2025, selling approximately 15% and 13% of its shares respectively, while maintaining them as the fund's largest positions. The sales, totaling over $500 million in Microsoft alone, were driven by Meta's multiple expansion and concerns over Microsoft's AI-related cloud computing growth. Smith reinvested around $100 million into Intuit (INTU), citing its strong earnings and growth in TurboTax Live and Credit Karma, despite Intuit's premium valuation of 33 times forward earnings.

Analysis

Fundsmith, guided by Terry Smith's "invest in good companies, don't overpay, and do nothing" philosophy, executed notable portfolio adjustments in Q1 2025. The fund trimmed its positions in two of its largest holdings, Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT), divesting approximately 15% and 13% of its shares, respectively. This move, which involved selling over half a billion dollars worth of Microsoft stock, was reportedly driven by Meta's significant multiple expansion, with its forward P/E climbing from around 24 to over 28, and initial concerns regarding the impact of evolving AI model landscapes on Microsoft's cloud computing growth, particularly Azure, though the article notes Microsoft's stock subsequently reached new all-time highs. Despite these partial sales, both Meta and Microsoft remain Fundsmith's top two holdings, indicating a strategic rebalancing rather than a fundamental shift in conviction. Concurrently, Smith reinvested approximately $100 million to re-establish a position in Intuit (NASDAQ: INTU), a stock previously held from 2017 to 2022. This decision was underpinned by Intuit's strong recent earnings report, highlighted by an expected 47% revenue growth in TurboTax Live, a 31% year-over-year growth in its Credit Karma segment, and robust performance in its enterprise software divisions like QuickBooks and Mailchimp, which are also benefiting from AI-driven enhancements. Intuit currently trades at a premium valuation of approximately 33 times forward earnings, but its strong growth trajectory and expanding profit margins are presented as justification for this multiple.

Key Decisions for Investors

• Consider reviewing allocations in high-performing technology stocks like Meta and Microsoft, as even long-term focused funds such as Fundsmith are selectively trimming positions to manage valuation risk and reallocate capital to perceived better growth opportunities.
• Evaluate Intuit (INTU) as a potential investment, given Fundsmith's re-established position and the company's strong growth momentum in key segments such as TurboTax Live (47% expected revenue growth) and Credit Karma (31% YoY growth), while being mindful of its premium forward P/E of approximately 33.
• Investors might find it prudent to adopt a disciplined approach to realizing partial profits from significant winners, even within a long-term investment strategy, to redeploy capital into companies demonstrating accelerating fundamentals and attractive growth prospects.