The Ferguson Water Thesis with Todd Wenning

Welcome to Episode 32 of the Preferred Shares Podcast.

In this episode, we explore the water thesis behind Ferguson Enterprises, a leading distributor of HVAC and plumbing solutions. To help walk us through the intricacies of the thesis, we are joined by Todd Wenning. Todd is a prior contributor at The Motley Fool, previously covered companies on the sell-side for Morningstar and the buy-side for Johnson Investment Counsel and Ensemble Capital Management. He’s a busy guy! He runs KNA Capital Management, LLC, an Ohio-registered investment advisor, and is the founder and editor of the newsletter Flyover Stocks. He is also currently teaching Portfolio Management at the University of Dayton.

In This Episode

The history of Ferguson — Its founding and early focus.

The water thesis — Why now is the right time.

The distributor model — How Ferguson’s position in the value chain makes it a prime beneficiary of the water thesis.

Full scope — The expansive SKU listings, inventory management, and diversified suppliers and customer bases that work with Ferguson.

The market — A look at market share and how competition has evolved.

Capital Allocation — How Ferguson redeploys capital across organic investments, bolt-on acquisitions, and capital returns to shareholders.

Reciprocity — How the HVAC and water sides of the business assist one another, creating a system greater than the sum of its parts.

Management — Exploring compensation, alignment, and horizon.

Risks — What could go wrong.