Terry Smith loses one of his 22 stocks to takeover

Fundsmith founder Terry Smith is set to lose one of the 22 stocks in his Equity fund to an acquisition, less than a month after the vehicle's launch.

One of Smith's high-conviction holdings is US food production and distribution company Del Monte, which today agreed a $5.3bn takeover by Kohlberg Kravis Roberts. Smith says he has mixed emotions over the deal. "On one level this is good news. The price of our Del Monte has risen and will rise further if or when the takeover is completed. This will boost short term performance of the fund," he says. "But on the other hand is will mean that we will lose a stock which we wanted to own. We purchased Del Monte on a free cash flow yield of about 10%. "This is an unusually high yield ...