Fresh losses for the company and concerns about a recent foray into the grocery business prompted the Fundsmith Equity (GB00B4Q5X527) team to sell out of Amazon (US:AMZN) just a year and a half after first investing.
Speaking at the Investors’ Chronicle's Future of Private Investing event last week, Mark Laurence, chief operating officer at Fundsmith, said that the company had not lived up to the fund’s thesis that it could transform into a higher-return business. Fundsmith, led by Terry Smith, bought into Amazon in October 2021 and sold out last month.
“We had shunned Amazon for a very long time and been quite cynical; it was a business that didn’t make much profit, albeit top-line growth had been quite impressive,” Laurence said. “But we thought if that inflection point was about to occur and it was able to use its platform in terms of advertising. We quite liked the advertising business as a high-return business.”