Activist investor hedge fund buys stake in Ferguson

A hedge fund run by veteran activist investor Nelson Peltz has bought a 6% stake worth around £736 million in plumbing group Ferguson.

Trian said it believed Ferguson – previously called Wolseley – was “an attractive business that trades at a discount to comparable US peers” as it snapped up the holding.

It added it has been in contact with Ferguson management and “looks forward to working with them to explore and implement initiatives that it believes can create long-term shareholder value”.

Ferguson shares lifted 6% after the announcement.

Trian’s stake swoop comes after Ferguson shares have been under pressure in recent months, slumping in March after it warned over slowing growth and said full-year profits will be at the lower end of market forecasts.

Ferguson’s business in the US – where the company makes more than 90% of its profits – has been continuing to perform well, with trading profits up 8.2% in the six months to January 31.

But it has continued to struggle in the UK amid difficult markets, with constant currency sales tumbling 10.4% and trading profits slumping 16.7% in the half year.

Ferguson has been overhauling its UK arm, axing branches and quitting unprofitable wholesale business in an attempt to turn around trading.

The group changed its name from Wolseley in 2017 as part of efforts to focus more on the US, where it makes the bulk of its revenue and trades as Ferguson.

But the Wolseley name has been retained in the UK, replacing previous brands such as Plumb Center.

Mr Peltz’s hedge fund already has stakes and seats on the boards of a raft of big US firms, such as General Electric and Procter & Gamble.