Sohn Foundation 2019 London Review

Activism, ESG and accounting analysis

Hamlin Lovell
Originally published in the January 2020 issue

The eighth annual Sohn London Investment Conference showcased seven long ideas, four short ideas, and a regional strategy, from ten fund managers and one business school student, who won the third Sohn London Investment Idea Contest.

Activist longs 

Trian Fund Management LP owns over £900m of stock in plumbing distributor, Ferguson. Trian Partner and Senior Analyst, Brian Baldwin, argues that it is misunderstood and undervalued, but should get re-rated when it relists in the US. The firm gets 80% of its sales from branches, which are relatively insulated from e-commerce because Amazon cannot supply components as quickly in a business that requires speed and reliability. Around 75% of sales relate to repairs, maintenance and improvement (RMI), which are less cyclical. End customers are contractors, who are less price sensitive since labour costs typically make up 75% of total costs. 

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