Having told investors and reporters again at this year’s Fundsmith Equity (B41YBW7) annual general meeting that he was not a fan of Amazon.com, it seems Terry Smith has had a change of heart.

According to regulatory filings, the Fundsmith Long/Short hedge fund – which was set up last summer to manage part of Smith’s personal fortune – bought more than £8 million worth of Amazon shares in the second quarter, during which the share price traded between $3,000 and $3,500.

Smith has always resisted adding the stock to Fundsmith’s highly concentrated £27 billion portfolio, arguing that the retail business barely makes money and is supported by cash flows from the immensely profitable web services arm.

In his defence, while Amazon shares have soared over the past decade, the giant retail business still only had an operating margin of 3.6% in the second quarter while the much smaller AWS division posted a 28% margin. Despite only accounting for 13% of group sales, AWS provides more than half of group profits.

‘If Mr Bezos would float off AWS we’d be very interested, it would be a really good business, but we don’t like the idea of owning a company where one business is cross-subsidising a business that’s barely profitable,’ said Smith at the AGM.

Although he may have softened his view on the firm, we somehow doubt Smith will push for Amazon to be included in the retail fund any time soon.

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