| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Colebrooke Partners spent the first half of 2026 upgrading portfolio quality and defensibility through deliberate position changes. The manager sold Eurocell after its CEO departed abruptly, as the thesis was explicitly tied to that leader's execution plan. Macfarlane Group was sold to fund the purchase of Howden Joinery, upgrading from a good business to an exceptional one. Howdens was acquired at approximately £7.30 per share during spring volatility driven by delayed UK rate cut expectations. The manager views Howdens as one of the UK's best businesses, with an uncopiable moat built on local depot density, national manufacturing infrastructure, and a trade-focused model that monetizes builders' careers rather than homeowners' transactions. The business earns 23% returns on capital, trades at less than 15x earnings, and has consistently gained share through every downturn. The portfolio now consists of eight concentrated positions, each a market leader with understood competitive advantages and trusted management. Midwich was added to opportunistically during forced selling. The manager expects to own these businesses for many years, allowing depot expansion, margin recovery, and compounding to drive returns from current valuations that assume very little about the future.
Build a concentrated portfolio of eight high-quality UK businesses with defensible competitive moats, strong management teams that allocate capital like owners, and valuations that offer attractive long-term returns without requiring heroic assumptions about the future.
Manager expects the portfolio to compound over the coming years as the gaps between price and value that caused pain in 2025 close. The portfolio trades at valuations that assume very little about the future, with Howdens offering both cyclical recovery potential and structural growth from depot expansion. Manager intends to own these businesses for many years and let compounding, margin recovery, and depot roll-out do the work. Tone is patient and confident, with no urgency to trade or chase performance.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 17 2026 | 2026 Q2 | HWDN.L, MIDW.L, MOON.L | Building Materials Retail, Capital Allocation, competitive moats, Homebuilders, Quality, small caps, United Kingdom, value |
HWDN.L MIDW.L |
Colebrooke deliberately upgraded portfolio quality in H1 2026, selling Eurocell and Macfarlane to fund Howden Joinery at £7.30 during rate-driven volatility. Howdens possesses an exceptional moat through uncopiable depot density and national infrastructure, earns 23% ROIC, and gains share through downturns. The concentrated eight-position portfolio now offers the highest quality and defensibility in the fund's history, with valuations requiring minimal future assumptions. |
| Aug 2 2025 | 2025 Q2 | BMY.L, GRG.L, MACF.L, MIDW.L, NAH.L, THG.L | Distribution, liquidity, Quality, small caps, Uk, value, volatility |
MACF LN NAH LN THG LN MACF.L NAH.L THG.L |
Colebrooke delivered -14.53% in H1 2025 but used market volatility to upgrade portfolio quality. Added Macfarlane Group at attractive 10x FCF valuation while exiting NAHL and THG positions. Focus on UK distributors with strong moats and recurring revenues. Manager sees generational opportunity set despite near-term performance headwinds. |
| Jan 20 2025 | 2024 Q4 | ATG.L, ECEL.L, MIDW.L, MOON.L, NAH.L, THG.L, WINE.L, WOSG.L | Building Materials, concentrated, small caps, Uk, undervalued, value |
ECEL.L ASC.L |
UK small cap specialist launched in September 2024 with 5.93% net return. Sold Asos on growth concerns, bought Eurocell at 10x earnings despite strong historical margins. Vertically integrated PVC manufacturer trading below intrinsic value with credible management plan for margin expansion. UK market remains structurally undervalued with attractive opportunities for concentrated, patient capital deployment. |
| Jul 15 2024 | 2024 Q2 | ASC.L, ATG.L, LIT.L, MIDW.L, MOON.L, MRL.L, NAH.L, THG.L, WINE.L, WISE.L, WOSG.L | Luxury, marketplaces, Portfolio Management, small cap, UK Equities, value |
ATG.L WOSG.L |
UK small-cap value manager executed significant portfolio rotation, selling Wise and LCM at substantial gains while adding ATG and WOSG at attractive valuations. New positions benefit from network effects in auction marketplaces and luxury watch distribution relationships. NAHL asset sale process progressing well. Strong focus on competitive moats and management quality in concentrated UK portfolio. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Competitive MoatsManager emphasizes businesses with defensible competitive advantages that deepen over time. Howden Joinery exemplifies this with local depot density backed by national manufacturing and logistics infrastructure that competitors cannot replicate. The portfolio is explicitly constructed around businesses with genuine moats that use difficult periods to take share from weaker competitors. |
Competitive Advantage Market Share Barriers to Entry Switching Costs Network Effects |
QualityThe entire letter is framed around upgrading portfolio quality through the sale of Eurocell and Macfarlane and the purchase of Howden Joinery. Manager describes building a higher quality and more liquid portfolio than ever before, with eight businesses that are leaders in their markets, each with understood moats and trusted management teams making rational long-term decisions. |
Quality Businesses Market Leaders High Returns Capital Allocation Management Quality | |
HomebuildersHowden Joinery operates in the UK fitted kitchen market, which is housing-linked and cyclical. Manager acknowledges the cyclical nature but emphasizes Howdens' track record of gaining share through downturns. The UK kitchen market was down approximately 3% in 2025, yet Howdens grew same-depot revenue by 2.6% and group revenue by 4.1%, demonstrating resilience in a weak housing environment. |
Housing Kitchens RMI Replacement Demand Cyclical | |
Building Materials RetailHowden Joinery manufactures and distributes fitted kitchens and joinery exclusively to the building trade through 891 UK depots. The business model monetizes the builder's career through repeat, high-frequency trade relationships. Manager highlights the 62.7% gross margin achieved in a declining market, with pricing power demonstrated by annual price increases that stick even in weak conditions. |
Distribution Trade Depots Pricing Power Gross Margin | |
United KingdomThe entire portfolio is UK-focused, with all eight holdings listed on the London Stock Exchange. Manager discusses UK-specific dynamics including the housing market, interest rate expectations, and the conflict with Iran pushing oil prices higher and delaying expected UK rate cuts. Howdens operates 891 UK depots with expansion toward a target of approximately 1,000. |
UK Market London Stock Exchange Interest Rates Housing Market | |
Capital AllocationManager places heavy emphasis on management teams that allocate capital like owners. Howdens' capital allocation hierarchy is explicitly praised: high-return organic reinvestment first, progressive dividend second, buybacks from surplus cash third, and leverage matched to cyclical reality. Management is measured on return on capital employed with vested shares held for two additional years. The DIY Kitchens acquisition is cautiously approved as sensible but manager wants restraint on M&A to remain the rule. |
ROIC Reinvestment Dividends Buybacks M&A Discipline | |
| 2025 Q2 |
DistributionThe fund has invested in two UK distributors, Macfarlane Group and Midwich, focusing on businesses with high customer switching costs, disciplined internal incentives, and recurring revenue bases. These distributors strengthen their market positions during periods of weaker demand and offer attractive risk-adjusted returns through high free cash flow yields. |
Packaging Logistics Switching Costs Recurring Revenue Market Position |
ValueThe manager emphasizes acquiring high-quality businesses at attractive valuations, citing Macfarlane purchased at less than 10x run-rate free cash flow for a business compounding EBIT at 15% annually. The portfolio represents what the manager considers extraordinary value opportunities in current markets. |
Valuation Free Cash Flow EBIT Compounding Quality | |
| 2024 Q4 |
Building MaterialsEurocell operates as a vertically integrated PVC profiles manufacturer and building plastics distributor with over 200 branch locations. The company serves windows and doors installers, small builders, and roofing contractors in the UK market. Management targets £500m sales with 10% operating margins through branch network expansion, improved windows and doors proposition, and garden rooms offerings. |
PVC Construction Distribution Vertical Integration Branch Network |
ValueThe fund purchased Eurocell at approximately 10x current year earnings despite the company's historical ability to earn double-digit operating margins and 20%+ returns on capital. UK plc remains structurally undervalued versus other developed markets. The manager expects to earn well in excess of the 15% IRR target from Eurocell investment. |
Undervalued Cheap Valuation Returns on Capital IRR Target UK Discount | |
Small CapsThe portfolio consists entirely of UK small cap companies including Eurocell, NAHL Group, Midwich, Moonpig, and others. The manager references a small group of UK small cap investors familiar with one undisclosed position. The fund operates in the UK small cap market with concentrated positions. |
UK Small Cap Concentrated Portfolio Specialist Investors Illiquid Names Niche Market | |
| 2024 Q2 |
MarketplacesATG operates leading auction platforms across art/antiques and industrial/commercial verticals, benefiting from network effects where scale aggregates more bidders and auction houses. The business follows the 'Marketplace Playbook' with value-added services like ATG Ship and ATG Pay improving take rates while enhancing the offering to auction houses. |
Auction Network Effects Aggregation Platform |
LuxuryWOSG is a leading retailer of luxury watches and jewelry with 100+ year relationships with top brands, particularly Rolex. The company has ambitious plans to double sales and more than double EBIT by FY28, supported by Rolex's backing for US expansion plans. |
Watches Rolex Brand Equity Distribution | |
E-commerceATG is transforming complex auction purchasing journeys into ecommerce-like experiences through technology improvements. The company focuses on pulling in new bidders by making the process more familiar and accessible. |
Digital Transformation User Experience Online Auctions |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 17, 2026 | Fund Letters | Colebrooke Partners | HWDN.L | Howden Joinery Group | Furnishings, Fixtures & Appliances | Home Improvement Retail | Bull | London Stock Exchange | competitive moat, Cyclical, Depot Network, Equity, high-ROIC, home improvement, Kitchens, Manufacturer, market share gains, operating leverage, Trade Distribution, UK, Value, vertically integrated | Login |
| Jul 17, 2026 | Fund Letters | Colebrooke Partners | MIDW.L | Midwich Group | Electronics & Computer Distribution | Technology Distributors | Bull | London Stock Exchange | Audio Visual, AV Distribution, Cyclical, Equity, Forced Seller, Low Valuation Multiple, market share gains, Technology Distributor, UK, Value | Login |
| Aug 2, 2025 | Fund Letters | Jack Pailing | MACF LN | Macfarlane Group plc | Materials | Trading Companies & Distributors | Bull | NYSE | Acquisitions, Distribution, FCF, Packaging, Switchingcosts | Login |
| Aug 2, 2025 | Fund Letters | Jack Pailing | NAH LN | NAHL Group plc | Communication Services | Research & Consulting Services | Bear | NYSE | Catalysts, Liquidity, M&A, Risk, valuation | Login |
| Aug 2, 2025 | Fund Letters | Jack Pailing | THG LN | THG plc | Financials | Internet & Direct Marketing Retail | Bear | NYSE | Alignment, Branding, Churn, Governance, Incentives | Login |
| Jun 30, 2025 | Fund Letters | Colebrooke Partners | MACF.L | Macfarlane Group | Industrials | Trading Companies & Distributors | Bull | London Stock Exchange | Distributor, European expansion, High returns, Industrial, Low Capital Intensity, Packaging, switching costs, UK, Value | Login |
| Jun 30, 2025 | Fund Letters | Colebrooke Partners | NAH.L | NAHL Group | Financials | Specialized Finance | Neutral | London Stock Exchange | Critical Care, Delisting Risk, exit, Legal Services, liquidity risk, M&A catalyst, Personal Injury, UK | Login |
| Jun 30, 2025 | Fund Letters | Colebrooke Partners | THG.L | THG Group | Consumer Discretionary | Internet & Direct Marketing Retail | Bear | London Stock Exchange | Customer Defection, DTC, e-commerce, governance issues, Management alignment, Rebranding Risk, Sports Nutrition, UK | Login |
| Jan 1, 2025 | Fund Letters | Colebrooke Partners | ECEL.L | Eurocell plc | Materials | Building Products | Bull | London Stock Exchange | Branch Network, Building Products, Cyclical Recovery, Equity, ERP implementation, PVC Manufacturing, turnaround, UK housing, Value, vertical integration | Login |
| Jan 1, 2025 | Fund Letters | Colebrooke Partners | ASC.L | ASOS plc | Consumer Discretionary | Internet & Direct Marketing Retail | Bear | London Stock Exchange | Asset Sale, debt refinancing, DTC, e-commerce, Equity, Fast-fashion, turnaround, UK retail | Login |
| Jul 1, 2024 | Fund Letters | Colebrooke Partners | ATG.L | Auction Technology Group plc | Communication Services | Interactive Media & Services | Bull | London Stock Exchange | Aggregation Theory, Antiques, Art, Auction Platform, Commercial, e-commerce, Industrial, marketplace, network effects, technology | Login |
| Jul 1, 2024 | Fund Letters | Colebrooke Partners | WOSG.L | Watches of Switzerland Group plc | Consumer Discretionary | Specialty Retail | Bull | London Stock Exchange | brand partnerships, growth, Jewelry, Luxury Retail, Rolex, Specialty retail, US Expansion, Value, Watches | Login |
| TICKER | COMMENTARY |
|---|---|
| HWDN.L | Howdens manufactures and distributes fitted kitchens and joinery, and sells them exclusively to the building trade, the small local builders and fitters who install most of Britain's kitchens, through a network of 891 UK depots. The homeowner is never Howdens' customer; the builder is. That distinction is the key to the whole model. A homeowner buys a kitchen once or twice in a lifetime. A builder fits many every year, buys at a confidential trade price, marks the kitchen up to the homeowner, and comes back next week for the next job. Howdens monetises the builder's career, not the homeowner's transaction, which converts a lumpy, big-ticket consumer purchase into a repeat, high-frequency trade relationship spread across tens of thousands of small accounts, none of which is individually material. I believe Howdens' moat is one of the very best of any UK listed business. What makes it exceptional is that it is easy to describe and almost impossible to copy. The advantage is local density backed by a national engine. A builder will only rely on Howdens if the depot is minutes away and the product is physically on the shelf, today; a job held up is money and reputation lost. Delivering that promise across the country requires nearly nine hundred depots, in-house manufacturing in Cheshire and Yorkshire, and a logistics operation that last year moved 73.4 million pieces of product at a 99.98% depot service level. A competitor cannot replicate this in one region without the national fixed-cost base behind it, and cannot replicate it nationally without decades of capital and accumulated depot-level know-how. Nobody locks the builder in. There are no contracts, and that is precisely why the stickiness is so durable: the builder stays because Howdens is genuinely the best answer to his problem, every day. First, Howdens makes much of what it sells, so its P&L captures a manufacturing margin and a distribution margin at once: a 62.7% gross margin last year, a six-year high, achieved into a declining market, with pricing, mix and manufacturing efficiency all contributing. A business that raises prices every year into a weak market, and makes them stick, is showing you its moat in the numbers. Second, and hardest of all to copy, is the culture. Each depot manager runs their depot as a quasi-business and is paid on its local profit. In 2008-09 management stopped opening depots, pulled roughly £35m of stock out of the business, refused to fire-sell, and then resumed expansion while weaker competitors collapsed, emerging with more share. Through COVID, a quarter in which revenue halved was followed by a V-shaped recovery to record profits, again with share gained. And in 2025, into a UK kitchen market down around 3%, Howdens grew same-depot revenue by 2.6% and group revenue by 4.1%. In every downturn of the modern era, Howdens has come out relatively stronger. At our entry price the shares stood on less than 15x trailing earnings, with a free-cash-flow yield above 8%. That is for a business earning a roughly 23% return on capital, holding net cash, which converted over £3.8bn of operating cash flow over the past decade while returning more than £1.5bn to shareholders. UK kitchen demand is ultimately replacement demand from an ageing housing stock; it defers in a downturn, it does not disappear. Meanwhile Howdens' operating margin, at around 14.7%, remains well below its prior peak of 19.2%, because the soft housing market is suppressing volumes across a largely fixed depot cost base. When volume returns, operating leverage works in our favour, so both the cyclical recovery and the structural growth are still ahead of us, not behind us. On top sit two engines that do not depend on the cycle at all: the depot roll-out, which continues at roughly 25 new UK depots a year toward a target of about 1,000, each one a small, repeatable, high-return investment decision; and the young business in France and Ireland, growing quickly and approaching break-even, which we treat as free optionality rather than part of our base case. Andrew Livingston, CEO since 2018, previously ran Screwfix, which is essentially the same trade-focused, availability-led playbook in a different category. This is domain mastery, not a generalist learning on the job, and the eight-year record shows it: revenue has compounded from around £1.4bn to £2.4bn, guidance is set conservatively and met, and the difficult things (a declining market, France's losses, cost headwinds) are discussed openly rather than buried in adjusted metrics. Most importantly, the capital allocation hierarchy is exactly the one we would write ourselves: high-return organic reinvestment first, a progressive and well-covered dividend second, buybacks from genuine surplus cash third, and leverage matched to the reality of a cyclical business. Management is measured on return on capital employed, with vested shares held for a further two years. Since our purchase, Howdens has announced its largest-ever acquisition: DIY Kitchens, a fast-growing, founder-built online kitchen supplier, for £390m at a sensible multiple, part-funded for the first time by a bank facility, with the group remaining net cash. The one genuine long-term risk to Howdens' model is the slow migration of kitchen-buying away from the builder and directly to the homeowner; DIY Kitchens is the strongest pure expression of that channel, and Howdens has bought it from a position of strength, at a fair price, with a commitment to run it separately and leave the trade-only depot model untouched. We think we have bought one of the UK's great businesses, a franchise with a moat measured in decades, run by people who allocate capital the way owners do, at a price set by a market worrying about the next six months of interest-rate news. |
| MIDW.L | We increased our Midwich position by around a quarter during the worst of the spring's weakness, at prices well below 150p, around 6.5x trailing adjusted net profit, when a major shareholder appeared to be a forced seller. We added again more modestly in June. Midwich cannot control the ebbs and flows of the AV market, but it continues to strengthen its position within it, and at these prices we are being paid handsomely to wait for the cycle to turn. |
| MOON.L | When Moonpig announced its CEO succession, I wrote that the core franchise was strong enough that a steady hand which preserved its strengths would be a perfectly acceptable outcome for us, and nothing since has changed that view. |
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