Welcome back to the FTSE350 tip column, where we aim to beat the market by selecting fantastic opportunities from the best companies in the UK market. As I ruminated in the prior month, the US central bank has indeed begun its rate cutting cycle, with a large half percent sized cut in the middle of September.
This action from the US Federal reserve is a powerful move that will in turn change the dynamics of financial markets. This month, I continue to focus on these dynamics, selecting another beneficiary of the falling interest rates set to come in the following months.
The portfolio of tips has been performing very well, with Rightmove [LON:RMV] the standout performer, rising 22% in September. The business has been on the receiving end of a takeover approach from a business controlled by Rupert Murdoch, valuing RMV at £5.9bn. Whilst I am fairly surprised to see Murdoch as a suiter for RMV, it is not surprising to see the business being sought after - it is one of the most profitable companies in the world, with an operating margin over 70%.
Volution Group [LON:FAN] was another strong performer, up 14% during the month, as the company continued its acquisition spree in the highly lucrative HVAC business, offering to buy up the Aussie HVAC manufacturer Fantech for £144m. Volution has been a very good share for the portfolio, now up 79% since I tipped it 11 months ago. With the original thesis still intact, we're going to hold on for now.
Significant value from Rightmove
I bought Rightmove back in November 2023 as the shares had come under pressure related to a US competitor moving into the UK market through the acquisition of Zoopla. I believed investors to be overly worried about the competitive risk of a ‘deep-pocketed’ competitor making a move to the UK property portal market and that significant value was to be had with the shares. I also understood that Rightmove is underpinned by a powerful network effect, where 97% of prospective home buyers look at Rightmove when buying property in the UK, and, therefore, sales agents must list their properties on the site to attract buyers.
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