This month for the FTSE350 portfolio, I am looking to buy a very good quality business, at an opportune time, when the shares have been knocked down by factors external to the business.
If you have bought a big ticket item recently, you will have more than likely used an internet platform to facilitate your purchase. These platforms, that help us browse hundreds of variations of the available product or service, can grow to huge dominance off the perpetual forces of a network effect (more sellers leading to more buyers). Often loved by the consumer for their ease of use and buyer protection, these platforms sometimes draw ire from their customers, those who list goods for sale on the online marketplace, as the platform becomes increasingly powerful and can charge ever higher fees for doing business. It is this balancing act, between extracting as much value from sellers as possible, whilst ensuring that the marketplace continues to thrive, that the successful platform generates strong returns for us investors.
One such company that has finessed this balancing act, is the UK listed property portal, Rightmove plc [LON:RMV], the focus for today’s addition to the ‘buy list’. Whilst the health of the UK property market could be deemed as highly cyclical, affected by macroeconomic forces, Rightmove’s fortunes are not directly correlated to either house prices or transaction numbers, relying on a monthly subscription fee from estate agents and housebuilders who use the platform, Rightmove has managed to grow revenues sustainably even throughout periods of economic downturn.
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