Artisan Mid Cap Fund recently announced a significant portfolio adjustment, exiting its position in Ferguson Enterprises Inc. (FERG). This move, outlined in their fourth-quarter 2025 investor letter, reflects the fund's continuous evaluation of market dynamics and investment opportunities. Ferguson, a key player in distributing plumbing, HVAC, and building materials, had seen its stock reach a closing price of $251.31 per share by February 23, 2026, marking a 44.09% gain over the preceding 52 weeks and achieving a market capitalization of $50.458 billion.
The decision to divest from Ferguson was primarily influenced by its increased valuation, which altered the perceived risk-reward balance. Artisan Mid Cap Fund noted that while Ferguson's strong market position, efficient distribution networks, and consistent growth, bolstered by strategic acquisitions, were attractive, its current valuation made other construction and housing-related assets within the fund's portfolio more compelling. This tactical exit underscores the fund's disciplined investment philosophy, prioritizing companies with strong fundamentals trading at a discount to their intrinsic value, thereby maintaining an agile and responsive investment strategy in a constantly evolving market.
This strategic shift highlights the importance of active portfolio management and the constant reevaluation of investment theses. In a volatile market, adapting to changing valuations and seeking out superior risk-adjusted returns is crucial for long-term success. It serves as a reminder that even robust companies like Ferguson can become less attractive to investors if their market price outpaces their perceived value, prompting fund managers to seek out new, more promising ventures to maximize investor returns and uphold fiduciary duties.