Brasada Capital Management’s Views on Ferguson Plc (FERG)

Brasada Capital Management, an investment management company, released its Q3 2025 investor letter. A copy of the letter can be downloaded here. In the letter, the firm noted that the market entered the fourth quarter with equities near all-time highs and monetary policy easing. The firm also believes that this momentum could persist even though there are indications that a capital expenditure bubble exists. Further, the firm continues to invest selectively in companies with solid moats and cash flows, while steering clear of balance-sheet risks. In addition, you can check the fund’s top 5 holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Brasada Capital Management highlighted stocks such as Ferguson Enterprises Inc. (NYSE:FERG). Ferguson Enterprises Inc. (NYSE:FERG) is a plumbing and heating products distributor. The one-month return for Ferguson Enterprises Inc. (NYSE:FERG) was -6.01%, and its shares gained 21.71% over the last 52 weeks. On December 11, 2025, Ferguson Enterprises Inc. (NYSE:FERG) stock closed at $228.20 per share, with a market capitalization of $45.818 billion.

Brasada Capital Management stated the following regarding Ferguson Enterprises Inc. (NYSE:FERG) in its third quarter 2025 investor letter:

“Ferguson Enterprises Inc. (NYSE:FERG) is the largest scaled specialty distributor for North American plumbing/HVAC/waterworks. Its revenue is split ~51% residential, 49% non-residential; ~60% repair & replace (R&R) and 40% new housing builds. About 85% of revenue is finished goods; plumbing is ~50% of mix. ~95% of revenue is U.S., the rest Canada. Their customer base comprises of 22% waterworks, 17% residential trade plumbing, 14% residential build/remodel, 14% commercial/mechanical, 14% fire/fabrication/facility/industrial, 12% HVAC, 7% residential digital.

When we began due diligence for Equity Income early in the year, sentiment was washed out: FERG shares traded down 16% post-earnings on fears of commodity deflation and weak outlook. Yet revenue held despite housing weakness. The market priced in zero new-home construction growth plus low-single-digit commodity price deflation. In our opinion, the stock selloff was overdone: (1) housing demand had been weak for over 2 years, (2) commodity products are only 25% of FERG’s mix, (3) specialty distributors had consistently shown pricing resilience. With residential (40% of revenue) in the 5th–6th inning of weakness and non-residential (waterworks/civil/infra) strong, the worst was past us…” (Click here to read the full text)

In another article, we covered Ferguson Enterprises Inc. (NYSE:FERG) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.