Rightmove. Wrong price [Members]
For MOGULS by The Investor
on October 7, 2024
The best businesses can be too good to stay that way. Blessed with superb economics and seemingly-impregnable market positions, anyone would want to own their quality but for two recurring problems:
- Valuation – Unless the company or its sector is new (think Google-owner Alphabet on listing in 2004) or there is some kind of crisis (as Warren Buffett exploited with his American Express purchase in 1964) you must usually pay a generous multiple of future cashflows to buy the shares.
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Always enjoying the moguls pieces!
Rightmove: yet another quality stock on my radar (never owned, in this case) currently at a share price first achieved 3 to 5 years ago. (2019 in Rightmove’s case.)
About half of my portfolio (by name) fits into this category with an average of about 2020 for when the current share price was first achieved.
Thankfully (1) I bought or added to some of these since the (hopefully temporary) Mr Market malaise started; (2) the other half of my portfolio contains some really big gainers over the period since then; and (3) finally the fundamental numbers on my portfolio versus current prices slightly excites me again, as opposed to ‘meh’ for the last few years (it is not coincidental that I have made some mortgage overpayments over that time — whilst still adding to my portfolio too).
Higher interest rates like gravity for investors indeed!
@Owl — Thanks for your thoughts, I always feel a bit like a kid in the playground not being picked for the either team when I first post these pieces to busy Mogul types. 🙂
I have a sense — from your 50% portfolio mix comment — that our investing style may share some eclecticism.
Quality (exc. cash-rich tech) has certainly been tough sledding the past few years. IIRC we talked about the big drinks brands around the start of this year? Adding to those was a bright idea that I could have done without. 😉
They were finally bouncing on China stimulus (turned out I’d re-imported a lot of ‘China risk’ into my portfolio that I thought I’d mostly purged a couple of years ago on increasing concerns about the politics/property rights there) and now I’ve woken up this morning to anti-dumping tariffs being back on again!
Need to do some hard thinking, as on many measures the prices look almost once in a generational here. (But then again what, as I say in my article above, if Gen Z really doesn’t drink?)
But yes, like you I have done better under my other ‘hats’ of late.
Oh well, if something isn’t failing to work then you’re not diversified right? That holds for equities as well as assets I suppose.
Hopefully I’m laying the foundations for a stunning quality revival in future years, but the recent strength in bond yields is kicking that day further out, too…
So in the same way my kids are addicted to duolingo, my wife is addicted to rightmove. And she is not alone clearly -> https://www.bbc.co.uk/news/articles/c77xdp1e56yo
All strong reasons to invest!
On Rightmove itself, it’s worth pointing out that it isn’t the dominant player in every part of the UK.
Here in Edinburgh and the Lothians, the ESPC (Edinburgh Solicitors Property Centre https://espc.com/) dominates, and has done since pre-web.
@Owl — That’s very interesting on ESPC. On the face of it I can’t see why they should have kept an edge over Rightmove? I understand the Scottish property market is a little different in terms of bidding and so on, but that shouldn’t matter. And their website just looks like a slightly sub-standard version of Rightmove’s.
You can’t even call it parochial — Edinburgh must be the most cosmopolitan of the Scottish cities (except perhaps Aberdeen in its O&G pomp?) with more than average numbers of non-local buyers.
To be honest it almost makes me *more* bullish about Rightmove as a moated business, in that it would seem another point of evidence on how valuable incumbent habits are!
@Rhino — Haha, quite! I did mention property porn very briefly in the article, and your wife is far from alone. Don’t let her clap sight of The Modern House website if I were you. That’ll be FIRE kicked into touch for another 30 years… 😉
I’ve mentioned before I own shares in DuoLingo I think. That is another fascinating play on enduring habit. Big risk is AI, but for now it seems to be more a beneficiary.