Renowned investor Terry Smith, often likened to the UK’s Warren Buffett for his impressive market returns, has recently caught the attention of investors with a strategic move. Smith, known for his straightforward investment philosophy, has quietly added shares of a small artificial intelligence (AI)-)-enabled company to his Fundsmith portfolio. This move comes amidst growing interest in AI-driven consumer tech and signals potential confidence in Oddity’s prospects.
A rising star in the beauty industry
Operating in the consumer tech sector within the beauty industry, it boasts two digital-first brands: Il Makiage and SpoiledChild. Il Makiage’s flagship product, the PowerMatch algorithm, utilizes AI to analyze skin tone and beauty needs through a phone camera, promising superior product recommendations.
The brand has garnered significant acclaim, with its Woke Up Like This foundation amassing over 550,000 independent five-star reviews, indicating a strong consumer response to its innovative approach.
Despite experiencing a 25% dip in share value since its IPO, shown uncommon resilience and profitability among new tech offerings. The company is poised for substantial growth with a robust revenue increase of 37% year-on-year in the third quarter, along with promising projections for 2023. Its healthy financial position, boasting no debt and significant cash reserves, further bolsters investor confidence in its stability and potential for expansion.
Investor sentiment and market outlook
Terry Smith’s decision to include Oddity Tech in Fundsmith’s portfolio has sparked interest among investors, indicating a potential undervaluation of the stock. Notably, Smithson Investment Trust, founded by Smith himself, participated in Oddity’s IPO, highlighting broader confidence in the company’s trajectory.
While market analysts remain cautious, citing slower growth projections amidst a challenging consumer environment, the company’s targeting of the burgeoning global beauty industry presents a compelling long-term investment opportunity.
