Tullett Prebon (LON:TLPR) is an inter-dealer broker, which basically means they act as a middleman between commercial and investment banks and other parties. If somebody wants to trade in treasury products, interest rate derivatives and fixed income, they go to Tullett Prebon. They've had a convoluted history of mergers, takeovers and demergers going back over the past 140 years. At various points the company has had many names including Prebon Marshall Yamane, Tullett Liberty, Collins Stewart Tullett and Tullett & Riley. Throughout this maze-like history they were often one of the largest brokerages in the industry. The most recent change came in 2006 when Collins Stewart Tullett was demerged into £CLST and Tullett Prebon.
Terry Smith
I couldn't put Tullett Prebon into the portfolio without mentioning their CEO, Terry Smith. For those who don't know, Terry is a high profile figure in the City and in the financial media, known for his 'no nonsense' approach and for being 'outspoken'. From my point of view, I'm much more interested in the fact that he has started his own investment fund after successfully running the Tullett Prebon pension fund to a handsome surplus. Fundsmith, as his fund is known, is interesting because of the investment philosophy. If you check out the Fundsmith site and look at the Owner's Manual, you'll find a very enlightening and readable document. Overall, the investment philosophy is similar to mine and Warren Buffett's (although I must admit that I've learned more from Buffett than he has from me).
Almost all of what's written in that Owner's Manual applies to what I'm doing here. There are differences of emphasis, such as Fundsmith's desire to own companies which sell consumer non-durables. I own Reckitt Benckiser, which fits into this category, but I also own BAE Systems which certainly doesn't. But the gist of it; the concentrated holdings, high quality companies, growing companies, good returns on retained earnings, good cash flow, high earnings and dividend yields; they're all components of my approach. Of course none of this is surprising since we're both effectively students of the master, Warren Buffett.
As time ticks by I'll be checking in on Terry and his Fundsmith fund to see how we compare.
Past Performance
My key metrics as always are revenue, earnings and dividend growth over the long term. In this case they've all…
