FTSE 100 stocks crash, but Nick Train still smiling

Year-to-date gains for Rentokil Initial (LSE:RTO) and Rightmove (LSE:RMV) dissolved today as the pest control firm trimmed guidance and a rival eyed a bigger share of the property portal market.

Their double-digit percentage share price losses came as the FTSE 100 index struggled for a second successive session, with investors increasingly fearful due to the Middle East conflict and the prospect of a longer period of high interest rates.

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For holders of Finsbury Growth & Income (LSE:FGT) Trust, which is managed by Nick Train, the weaker blue-chip session was masked by strong performances for key portfolio constituents London Stock Exchange Group (LSE:LSEG) and drinks giant Diageo (LSE:DGE).

LSE rose 166p to 8240p, leaving shares 15% higher in the year, after boss David Schwimmer forecast annual revenues at the upper end of the 6%-8% forecast range. He added that products with strategic partner Microsoft Corp (NASDAQ:MSFT) are due in the second half of 2024.

The revenues guidance was underpinned by third quarter growth of 7.2% in the largest division of Data & Analytics, where the company has focused on a deeper understanding of customers’ data strategies and day-to-day usage.

Capital markets lifted 6.2% thanks to fixed income and derivatives activity, which offset an 8.6% decline in equities caused by subdued volumes in primary and secondary markets.

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Despite these trends, London is once again Europe’s top stock market after a record share price for oil giant Shell (LSE:SHEL) contributed to the exchange retaking its crown from Paris.

Train has no oil exposure, but he believes that his big positions in LSE alongside data and software companies such as RELX (LSE:REL) and Sage Group (The) (LSE:SGE) can offer resilience to the portfolio.

He told investors this month: “It is said that in the 21st century – ‘Data is the new oil’. Recently, we have suffered from having no exposure to actual oil.

“But we ask investors to note the growing proportion of the portfolio invested in companies that own and create proprietary data, like RELX, Sage, Experian (LSE:EXPN) and LSEG.”

Bank of America agrees with Train’s LSE stance after reiterating its “buy” recommendation and 10,000p target price on the back of today’s update. The bank noted that the stock trades on 23 times 2024 earnings, which is about 20% below US data peers.

Its analysts added: “LSE is well-placed to benefit from the demand for data, while the Microsoft partnership is likely to transform and expand its offering.”

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Alongside LSE at the top of the FTSE 100, shares in car insurer Admiral Group (LSE:ADM) recovered 56p to 2,487p. The rise came after All-Share stock Sabre Insurance Group (LSE:SBRE) revealed it had increased prices at a level sufficient to cover high ongoing inflation, boosting hopes for margin expansion in 2024.

Rentokil Initial led the fallers board, declining 103.2p to 491.6p in a blow for investors who viewed the catching of rats and dealing with bedbugs as a recession-proof essential service.

Chief executive Andy Ransom reported a “good overall performance” in the third quarter but market jitters over the company’s integration of Terminix were fuelled by a warning that the North American full-year performance will be marginally below previous expectations.

Rentokil said that retention rates in the region were resilient but that the level of new residential customer acquisition was challenged by the economic backdrop.

The Rightmove share price slump of 70p to 505.4p came as it emerged that AIM-listed portal OnTheMarket (LSE:OTMP) had backed a takeover offer by CoStar Group Inc (NASDAQ:CSGP) a US-listed operator of online marketplaces and a property information analytics provider.

The suitor, which has a $32 billion market cap, said it intended to invest £46.5 million into sales and marketing in the first full year following the deal. This is six times OnTheMarket’s current spend and more than three times that of Rightmove.

Despite these developments, Bank of America remains supportive of Rightmove after reiterating a “buy” recommendation based on a current target price of 625p.

It said: “History has shown unseating incumbents in the classified space is no easy feat. And Rightmove is a significant market leader even by classifieds’ high standards, boasting 86% share of consumer engagement.”

The bank said shares trade on 21 times 2024 earnings, already close to five-year lows relative to the market.