Core Insights - The Fundsmith Equity Fund reported a total return of +0.8% for 2025, underperforming the MSCI World Index which rose by +12.8% [4][7]. - Since inception on November 1, 2010, the Fund has outperformed the Index by 1.7% per annum with a Sortino Ratio of 0.75, indicating less downside volatility compared to the Index [7][8]. - The Fund is ranked as the third best performer in the Investment Association Global sector of 155 funds since inception, with a return 322 percentage points above the sector average [8]. Performance Analysis - The Fund's performance in 2025 was impacted by three main issues: index concentration, the growth of assets in index funds, and dollar weakness [9][10][36]. - The top ten stocks in the S&P 500 accounted for 39% of its value and contributed 50% of its total return in USD by the end of 2025, highlighting significant market concentration [13][10]. - The rise of index funds has led to a momentum strategy that disproportionately benefits large-cap stocks, making it challenging for active funds to compete without holding these stocks [17][20]. Market Dynamics - The US dollar weakened against the pound from approximately $1.25/GBP to $1.35/GBP during 2025, affecting the GBP value of the Fund as most companies are US-listed [36][40]. - The price of gold reached a 50-year high of $4,319 per ounce, reflecting concerns about dollar strength and market conditions [39]. Portfolio Composition - The Fund's portfolio turnover was low at 12.7%, with a total cost of investment (TCI) of 1.06%, indicating a focus on minimizing trading costs [70][72]. - The weighted average free cash flow yield of the portfolio increased from 3.1% to 3.7% during 2025, suggesting improved valuation relative to the S&P 500 [68][69]. Stock Contributions - The top five detractors from the Fund's performance included Novo Nordisk, Automatic Data Processing, Church & Dwight, Coloplast, and Fortinet, with Novo Nordisk facing significant challenges in its market [45][46]. - Conversely, the top contributors were Alphabet, IDEXX, Philip Morris, Meta Platforms, and Microsoft, with Alphabet making its first appearance among the top contributors [51][52]. Investment Strategy - The Fund maintains a strategy focused on investing in high-quality companies with predictable growth and adequate returns on capital, avoiding momentum-driven investments [41][42]. - The Fund's management emphasizes the importance of understanding the underlying business performance and maintaining a long-term perspective on investments [60][79].

Core Insights - The "High Income DIY Portfolios" service aims to provide high income with low risk and capital preservation for DIY investors, particularly targeting income investors such as retirees [1] - The service offers a total of 10 model portfolios, including various strategies for income generation and risk management, with a focus on sustainable yields [2] Group 1: Portfolio Strategies - The service includes seven portfolios: three buy-and-hold, three rotational portfolios, and a conservative NPP strategy portfolio designed for low drawdowns and high growth [1] - The investment approach emphasizes dividend-growing stocks and aims for a 30% reduction in drawdowns while targeting a 6% current income [2] Group 2: Additional Features - The service provides buy and sell alerts, live chat, and strategies for portfolio management and asset allocation to help investors achieve stable, long-term passive income [2]

Amazon - Amazon's stock has seen less than 40% growth over the past five years, but it may be a good time to add to positions as it approaches 2026 [3] - The North American segment's adjusted operating income increased by 28% last quarter with only an 11% rise in sales, showcasing strong operating leverage driven by robotics and AI [4] - Amazon operates over 1 million robots in its fulfillment centers, coordinated by its DeepFleet AI model, enhancing its efficiency [5] - The company has become a leading digital marketing firm, with its sponsored ad program growing revenue by 24% in Q3, aided by AI [6] - Amazon Web Services (AWS) is expected to be a significant growth driver, with heavy investments in AI data centers to meet increasing demand [7] - The stock is attractively valued with a forward P/E ratio of less than 30 times 2026 estimates, making it a strong candidate for investment [8] Philip Morris International - Philip Morris stock has increased by around 35% this year but has been stagnant since summer, presenting a potential opportunity for investors [9] - The company does not sell cigarettes in the declining U.S. market, benefiting from stronger international volumes and pricing power [10] - The smokeless product portfolio, particularly the nicotine pouch brand Zyn, has seen shipments soar by 37% in the U.S. and retail sales volumes increase by 39% [12] - The heated tobacco product Iqos has also experienced a 15.5% volume growth in Q3, particularly in Japan and Europe [13] - Philip Morris is awaiting FDA approval for its new Iluma delivery system in the U.S., which could further enhance growth prospects [14] - The stock is valued at a forward P/E ratio of under 19.5 and a PEG ratio of 0.85, indicating it may be undervalued [15]

Sector Overview - Vice stocks experienced mixed performance in 2025, with Philip Morris International rising nearly 34% and AB InBev increasing about 29%, while Molson Coors fell 18% [1] - Despite challenges, vice stocks are considered "recession-proof" and are expected to remain resilient in the market [2] Cannabis Industry - President Trump signed an executive order reclassifying marijuana from Schedule 1 to Schedule 3, marking a significant regulatory change for the cannabis sector [4] - Companies in the cannabis industry are facing difficulties accessing financial services and capital, leading to investor wariness [4] Nicotine Market - The shift towards smokeless products is evident, with 41% of Philip Morris's revenue derived from smoke-free products like Zyn [4] - Philip Morris successfully defended against a class-action lawsuit regarding pricing practices for Zyn, the only FDA-approved nicotine pouch [4] Alcohol Sector - Sales of beer, wine, and spirits are declining, with Molson Coors reporting a loss of $2.9 billion in the fall quarter and anticipating a 4% sales drop this year [4] - AB InBev reported its slowest profit growth since 2021, while the industry faces challenges from the "sober-curious" trend [4]

Core Insights - Philip Morris International (PM) is the largest tobacco company, benefiting from strong margins in both its declining cigarette business and its growing "smoke-free" segment [1] - The company's profitability has enabled consistent dividend increases, reflecting its robust financial health [1] Company Analysis - PM has a durable competitive advantage due to its established market position and strong balance sheet [1] - The focus on high-growth smoke-free products indicates a strategic shift towards innovation and sustainability within the tobacco industry [1]

Core Viewpoint - Artisan Value Fund's third-quarter 2025 investor letter indicates that the equity market rally continued, driven by strong corporate earnings, increased AI investment, and favorable US fiscal policies, despite challenges such as tariffs [1]. Fund Performance - The Artisan Value Fund's Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 0.83%, 0.91%, and 0.90% respectively in Q3 2025, underperforming the Russell 1000 Value Index, which returned 5.33% [1]. Stock Highlights - Philip Morris International Inc. (NYSE:PM) was highlighted in the fund's investor letter, showing a one-month return of 3.14% and a 52-week gain of 34.20%, with a closing stock price of $161.05 and a market capitalization of $250.7 billion as of December 26, 2025 [2]. Sector Performance - The fund noted that stock selection was broadly negative across sectors in Q3, particularly in the consumer staples sector, where Philip Morris International Inc. was identified as a laggard contributing to underperformance [3].

Investment Rating - The report suggests that the domestic HNB (Heated Not Burned) industry is on the verge of significant growth, driven by international tobacco giants shifting towards new tobacco products [5]. Core Insights - The global cigarette market is experiencing an irreversible decline, with smoking rates dropping from 30.75% in 2005 to 21.74% in 2022, and cigarette market size decreasing from 53,908 billion sticks in 2018 to an estimated 51,561 billion sticks in 2024, reflecting a CAGR of -0.74% [1][13]. - Major tobacco companies, including Philip Morris International (PMI), are focusing on new tobacco products as a core growth driver, with PMI planning for over two-thirds of its revenue to come from new tobacco products by 2030 [1][20]. - The Japanese market serves as a reference point, showing that the rapid penetration of heated tobacco products has not negatively impacted tax revenues, with the market size growing from 37.28 billion sticks in 2019 to 64.50 billion sticks in 2024, a CAGR of 11.59% [2][51]. Summary by Sections Section 1: HNB as a Core Development Category - International tobacco giants are increasingly focusing on new tobacco products as a long-term performance core, with significant contributions to profitability [1.1]. - The global market for heated tobacco and electronic cigarettes is projected to grow, with sales expected to reach $38.85 billion and $23.04 billion respectively by 2024, reflecting growth rates of 12.7% and 9.5% [1.1][13]. Section 2: Domestic Tobacco Industry Challenges - The traditional cigarette market in China is under pressure, with production increasing from 23,642 billion sticks in 2019 to 24,655 billion sticks in 2024, but at a slowing growth rate [3][55]. - The inventory levels in the tobacco industry have risen significantly, from 150 billion yuan in 2010 to approximately 4,394 billion yuan in 2024, indicating a high stock level [3][56]. Section 3: Regulatory Framework for HNB - The regulatory landscape for heated tobacco products is becoming clearer globally, with established frameworks in the US, Japan, and Europe, providing a roadmap for compliance [4][62]. - The US has implemented a structured regulatory process for HNB products, which includes pre-market tobacco application (PMTA) requirements, ensuring a predictable compliance environment [4][66]. Section 4: Domestic Product Development and Market Readiness - Chinese tobacco companies have made significant strides in developing HNB products, with several companies launching domestic HNB devices and achieving a substantial number of patents in the field [4][5]. - The report emphasizes the importance of product innovation and international expansion for the high-quality development of the domestic tobacco industry [3][5]. Section 5: Company Analysis - Companies like Huabao International and Smoore International are highlighted for their strong technical reserves and potential for growth in the HNB sector, with Huabao expected to benefit from its leading position in the flavoring segment [5][5.1][5.2].

Group 1: Company Overview - Philip Morris International (PMI) was formed from the international operations of Altria in 2008 and primarily sells cigarettes and reduced-risk products outside of the US [8] - The company has expanded its portfolio with the 2023 acquisition of Swedish Match, enhancing its presence in traditional oral tobacco products and nicotine pouches [8] Group 2: Market Position and Analyst Insights - Analysts have set an average target price of $185.0 for Philip Morris International, indicating a positive outlook [9] - JP Morgan maintains an Overweight rating for the stock, aligning with the target price of $185 [10] Group 3: Options Trading Activity - Recent options trading shows a bullish sentiment with 53% of traders favoring calls, while 23% were bearish [1] - The average open interest for options stands at 687.0, with a total volume of 20,417.00, indicating significant trading activity [3] - Whales have targeted a price range from $80.0 to $200.0 for Philip Morris International over the last three months [2] Group 4: Recent Trading Performance - The current stock price of Philip Morris International is $162.66, reflecting a 0.37% increase with a trading volume of 1,753,973 [12] - RSI indicators suggest that the stock may be approaching overbought conditions [12]

Group 1 - Cigarettes have been a significant part of the military community since before World War I, with evidence of soldiers smoking during the United States-Mexican Border War of 1916 [1] - Ads historically depicted U.S. soldiers rolling their own cigarettes, indicating a long-standing association between military life and cigarette consumption [1] Group 2 - The lead analyst for Dividend Kings, Scott Kaufman, has over a decade of experience in the financial sector, focusing on high-quality dividend growth and undervalued investment opportunities [1] - The objective is to achieve a robust total return through cash dividends and strong capital gains [1]

Investment Rating - The report maintains a cautious optimism for the apparel industry in 2026, highlighting potential recovery driven by middle-income consumer growth and stimulus policies [5] Core Insights - The retail industry in 2026 will focus on delivery speed, value, and the introduction of agency commerce, with successful companies expanding market share through alternative revenue sources like memberships and media [3][4] - The consumer environment in the U.S. is expected to improve, benefiting discretionary spending, particularly in high-growth sectors like energy drinks, nicotine, and beauty products [6] - The food packaging and retail sectors will see improved profit margins due to falling commodity prices, although competition from private labels is intensifying [7] - Key investment themes include the performance of middle-income consumers, with a projected 2.5% increase in real income for the third and fourth income quintiles in 2026 [2] Retail Industry Summary - Four key themes for the retail industry in 2026: delivery speed, value, agency commerce, and the expansion of alternative revenue sources [3] - Companies like Dick's Sporting Goods, Monster, Philip Morris, and Estee Lauder are highlighted as top investment picks [3][14] Apparel Industry Summary - The apparel industry is expected to recover due to consumer demand for wardrobe updates and supportive policies for middle-income groups [5][11] - Factors influencing profitability include pricing management, demand elasticity, and tariff impacts [5] Nicotine Products Summary - Nicotine products have outperformed the market for two consecutive years, driven by consumer pressure and value-oriented behavior [6] Food Packaging and Retail Summary - The decline in commodity prices is expected to enhance profit margins, while competition from private labels poses risks [7] - Companies like Albertsons, Kroger, and Sprouts are positioned to benefit, along with protein companies like Tyson Foods and Hormel [7] Consumer Staples Summary - Recommended stocks in the consumer staples sector include Philip Morris and Monster, both showing strong growth potential [8] - Attention is drawn to companies like Pepsi, Elf, and Celsius, which may be undervalued due to excessive short-selling sentiment [8] Investment Opportunities Summary - Notable investment opportunities include Dick's Sporting Goods, Monster, Philip Morris, Estee Lauder, Ross Stores, and Marriott, all expected to benefit from favorable consumer trends [14]