Key facts
- Fund manager Terry Smith has sold his entire stake in Magnum Ice Cream.
- The sale occurred in May, less than six months after Magnum's December demerger from Unilever.
- Smith had previously sold his stake in Unilever in April.
- Unilever's strategic overhaul included merging its food division with McCormick.
- Investors criticized the McCormick merger structure and lack of a shareholder vote.
- Magnum Ice Cream has attracted interest from buyout firms Blackstone and CD&R.
Star stockpicker Terry Smith has sold his entire stake in Magnum Ice Cream, the former Unilever division, just weeks after exiting his position in Unilever itself. Smith, chief investment officer at Fundsmith, dumped his Magnum shares in May, according to the firm's latest factsheet. This move comes less than six months after Magnum's public debut in December following its demerger from Unilever.
Magnum, which owns brands like Ben & Jerry's and Cornetto, has faced a challenging start as a standalone company. It has become Europe's most shorted stock despite entering its peak sales season. The company has also attracted interest from private equity firms Blackstone and CD&R, which are reportedly considering an acquisition. This interest has helped Magnum's shares rise approximately 38% since news emerged, and the stock is now trading 7% above its IPO price.
Unilever's strategic overhaul, announced in 2024, aimed to divest underperforming divisions and focus on profitable 'power brands'. As part of this, Unilever merged its food division with spice giant McCormick in April in a significant deal. However, this merger drew criticism from some long-standing Unilever investors who were not consulted and would inherit a majority stake in the new entity. The merged company also carries substantial debt, with a net debt-to-earnings ratio nearing four to one.
Terry Smith, who was previously a top 10 shareholder in Unilever, sold his stake worth hundreds of millions of pounds in April. He publicly criticized Unilever for abandoning its promised operational focus in favor of activist-driven break-ups, specifically citing the transfer of its food business to McCormick, whose management he does not rate highly. By selling his Magnum shares, Fundsmith has now severed its 15-year relationship with Unilever.
In addition to Magnum and Unilever, Fundsmith also revealed it has exited its positions in elevator maker Otis and animal drugmaker Zoetis. The proceeds from these sales are being channeled into a new, undisclosed investment.