Ferguson Enterprises Inc

Ferguson Enterprises Inc (FERG) is a leading distributor of plumbing, HVAC and related building products in North America. The company benefits from scale advantages, strong supplier relationships and an ability to consolidate a fragmented market while generating attractive cash flow through cycles. This positions Ferguson well for continued growth as it capitalizes on its market leadership and operational efficiencies.

Ferguson continued to outperform its end markets in a challenging macroeconomic environment, demonstrating its ability to maintain pricing and achieve margin expansion. Additionally, the company continues to pursue accretive, low-risk tuck-in acquisitions that further bolster its market share growth.

Ferguson Enterprises (FERG US) has been a strong contributor to the fund's performance, with a notable increase of +12%. This reflects the company's robust business model and market position. The manager highlights the importance of fundamentally sound businesses in a frothy market, suggesting that Ferguson's strong returns and balance sheet make it a valuable holding. The positive performance indicates confidence in its growth potential and resilience in the current market environment.

Ferguson Plc is the largest scaled specialty distributor for North American plumbing, HVAC, and waterworks, with a balanced revenue split between residential and non-residential sectors. Despite a challenging housing market, Ferguson's revenue has remained resilient, and the stock selloff was overdone due to fears of commodity deflation. The company has demonstrated pricing power and is expected to continue compounding growth through both organic means and accretive M&A. With strong demand in non-residential sectors and a structural edge from scale, Ferguson is well-positioned to outperform smaller peers.

Ferguson Enterprises is a distributor of plumbing supplies and has shown strong performance, gaining 26.6% in the first half of the year. The company is positioned well within its niche market, benefiting from ongoing demand for plumbing supplies. The manager appreciates the financial health of their holdings, indicating a preference for companies like Ferguson that can thrive even in volatile conditions. This positions Ferguson as a strong growth opportunity within the portfolio, reflecting confidence in its ability to generate returns.

Ferguson is a great business but does have significant exposure to new home construction, and a premium valuation. The combination of these factors led us to reallocate capital elsewhere.