March 2021

• Terry Smith Annual  Meeting - https://www.youtube.com/watch?v=IojZCeUjhRg&ab_channel=Fundsmith

• LVMH - https://r.lvmh-static.com/uploads/2021/01/documents-financiers-2020_va_v2.pdf

  • 44B euros of revneue; down 17% YoY driven by drop in retail -31% and watches -24% and perfumes -23%. 

  • Pretty diversified base with Asia 34% Japan 7% 24% US, 16% Europe (ex France), 8% France

  • Stores grew in Asia and in total they added close to 100 in 2020 (down from 400 in 2019)

  • Operating Margins on Wine and Spirits are 30%+, 34% on fashion and leather goods, breakeven on perfumes, 9%-15% on watches, -2% on retail (small part of business)

  • Total operating margins were ~20% in 2020

  • Alcohol volumes down a bunch because clubs aren't opening

• AMADY - https://corporate.amadeus.com/documents/en/investors/2020/quarterly-results/q4-2020/fy-2020-management-review.pdf

  • Revenues down about 60% YoY

  • Currently trading at $76 a share, ahead of pre-pandemic - implying it maybe took market share from long term rival Sabre

  • Business's technology is old but announced plans to move to the cloud over a 3-5 year period

  • Return on capital employed has been 20%+ for the past 8 years and no reason to think it won't be well into the future

  • Business operates a couple of segments (Distribution - related to travel agency air bookings, IT - related to passengers boarding planes)

  • The business cut 15-20% of their workforce in April 2020 and raised a pretty big convert

    • Adjusted to exclude costs related to the implementation of the cost savings program announced in the second quarter of 2020. These costsrelate mostly to severance payments and amounted to €93.4 million and €169.1 million in the fourth quarter and the full year 2020, respectively (€66.4 million and €120.9 million in the fourth quarter and the full year 2020, respectively, post tax)

  • Airline industry may see long-term challenges and consolidation may happen which could hurt Amadeus over time

  • Potentially interesting as a re-opening play with a short term hold of around 1-3 years; risky to do that into an inflationary market and challenged industry

  • https://www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance-june-2020-report - higher oil prices may impact this market as well