Image source: Getty Images <\/p>\n
Just a few months ago, 3i Group<\/strong> (LSE: III) was the most successful FTSE 100<\/strong> growth stock I owned. Today? Not so much. But I still love it.<\/p>\n I\u2019d watched its progress for years and, when I set up my Self-Invested Personal Pension (SIPP) in 2023 using the proceeds of some old company pensions, I finally had the cash to put my money where my mouth was.<\/p>\n I piled into the private equity and infrastructure specialist and was quickly rewarded, with the share price doubling in just 18 months.<\/p>\n Still, I wasn\u2019t naive. I knew there was a big risk hanging over the stock and I\u2019d warned The Motley Fool readers about it several times. In September, that risk finally hit home.<\/p>\n 3i has a superb record of buying companies and transforming them, stretching back to 1945. The recent share price surge was driven almost entirely by just one position, Europe\u2019s fastest-growing non-food discount retailer Action. Its success meant it was worth around 75% of 3i Group\u2019s entire portfolio.<\/p>\n The board bought a majority stake in 2011 and has overseen its expansion from 250 stores across three countries to more than 3,000 in 14. Action is still expanding, pushing into Switzerland and Romania.<\/p>\n Unlike many retailers, it\u2019s benefitted from the cost-of-living crisis as shoppers hunt for value. Its \u2018treasure trove\u2019 format, offering up to 6,000 products, has proved a big hit.<\/p>\n But success comes at a price. With 3i shares up around 400% over five years at one point, it was trading at a 48% premium to net asset value (NAV). I did seriously consider taking some profits, but fatally delayed.<\/p>\n When I read 3i\u2019s first-half results on 13 November, I breathed a sigh of relief. They showed total returns of \u00a33.29bn, up 13% in six months, faster than the 10% achieved the previous year. Net asset value per share rose 12.4% to 2,857p.<\/p>\n The market response? A brutal 30% crash. That hurt, given my outsized holding, although over 12 months the shares are down a more modest 7%. And all it took was a suggestion that Action\u2019s sales were slowing in France.<\/p>\n Short-term volatility is the price investors pay for long-term success, so instead of bemoaning my lot, I decided to turn the dip to my advantage and average down on 3i Group.<\/p>\n I\u2019m not alone as 3i\u2019s directors have been piling in at this price, led by chief executive Simon Borrows, who invested \u00a31m. They clearly see it as a screaming buy and obviously, so do I.<\/p>\n There are signs of recovery but risks remain. As inflation falls, consumers may trade up, while Action\u2019s success will inevitably attract competition. Longer term, 3i will also need to find its next big growth engine. I\u2019m also curious to see whether it will take profits on Action. There could be a big dividend if it does.<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Just a few months ago, 3i Group (LSE: III) was the most successful FTSE…\n","protected":false},"author":2,"featured_media":622686,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[200564,748,393,4884,1144,712,48505,16,15,1764],"class_list":{"0":"post-655553","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-3i-group","10":"tag-britain","11":"tag-england","12":"tag-great-britain","13":"tag-northern-ireland","14":"tag-scotland","15":"tag-share-price","16":"tag-uk","17":"tag-united-kingdom","18":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115785023108373621","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/655553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=655553"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/655553\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/622686"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=655553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=655553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=655553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}