Ashtead Group (LSE:LHT) (U.K.), an international equipment rental company, was the top contributor for the quarter, returning 15%. While Ashtead is based in the U.K., it derives a majority of its revenue (84%) from North America. Ashtead recently released solid fiscal year 2016 results, showing 19% growth in its U.S. equipment rental business. Given that the market only grew 6% over the period, these results imply that Ashtead has continued to significantly gain market share. We have seen a secular shift in the U.S. market toward renting equipment instead of buying it, as it relieves the client of upfront investment and ongoing maintenance responsibilities. The rental market has also expanded significantly into non-construction related categories, which possess both higher returns and lower volatility than the general construction business. These factors should help Ashtead generate greater through-cycle profitability compared to the previous period.
From David Herro (Trades, Portfolio)'s Oakmark International Small Cap Fund second quarter 2016 commentary.
