I'm interested in what you think about the equipment on the balance sheet of GBP200m which management commented would cost a competitor GBP300-GBP350m to buy (compared to GBP390m market cap). Does this factor into your comfort in having such a large position?
Yes, it factors in - the replacement-cost point is a meaningful part of the thesis. That kind of scale and capital intensity is exactly what creates a moat in equipment rental, and it supports holding a sizeable position because the earnings power sits behind a barrier that can't be quickly competed away.
Totally agree with your thinking. I made most of my money with a few great trades in which I had taken a significant position in relation to my overall portfolio size (SHOP from 2017-2020 (8x), SMCI a few years ago (10-bagger) and STRL more recently (6x). To me, investing is not about being right all the time, it is about being right when it matters the most (i.e., when you have enough conviction to take a significant position).
I'm interested in what you think about the equipment on the balance sheet of GBP200m which management commented would cost a competitor GBP300-GBP350m to buy (compared to GBP390m market cap). Does this factor into your comfort in having such a large position?
Yes, it factors in - the replacement-cost point is a meaningful part of the thesis. That kind of scale and capital intensity is exactly what creates a moat in equipment rental, and it supports holding a sizeable position because the earnings power sits behind a barrier that can't be quickly competed away.
Totally agree with your thinking. I made most of my money with a few great trades in which I had taken a significant position in relation to my overall portfolio size (SHOP from 2017-2020 (8x), SMCI a few years ago (10-bagger) and STRL more recently (6x). To me, investing is not about being right all the time, it is about being right when it matters the most (i.e., when you have enough conviction to take a significant position).