Rentokil Initial plc (RTO): North American Weakness Undermines the Thesis

Broyhill Asset Management, a Charlotte-based firm, issued its third-quarter 2026 investor letter. The letter can be downloaded here . The Broyhill Equity Composite decreased by 0.3% in Q3, underperforming the MSCI All Country World Index, which gained 1.7%. For the first nine months of the year, the Composite returned 1.9%, compared to 13.4% for the Index. The quarter was characterized by a strong July, when the Composite rose by 3.3%, despite a significant fall in the semiconductor index. However, technology stocks led in August and September, while other sectors, including consumer staples and industrials, declined, leading to the decline. Broyhill cites rising oil prices, higher interest rates, and competition for capital as reasons to be cautious. The recent performance of Broyhill has been analyzed due to its divergence from the overall market trend. Despite this, the firm is confident in its portfolio's ability to adapt to varying economic conditions. Broyhill is committed to focusing on fundamental drivers and valuations while exploring new opportunities, valuing the trust of its investors and its long-term partners. Also, check the Fund's top five holdings to see its best picks for 2026.

In its Q3 2026 investor letter, Broyhill Asset Management noted Rentokil Initial plc (NYSE: RTO ) as its largest detractor. Rentokil Initial plc (NYSE:RTO) is a route-based service provider that offers a range of pest control services. On October 22, 2026, Rentokil Initial plc (NYSE:RTO) closed at $22.88 per share. Over the past month, Rentokil Initial plc (NYSE:RTO) returned 10.85%, but its shares are down 23.25% over the past year. Rentokil Initial plc (NYSE:RTO) has a market capitalization of $10.59 billion, and its stock has traded within a 52-week range of $19.50 to $34.67.

Broyhill Asset Management stated the following regarding Rentokil Initial plc (NYSE:RTO) in its Q3 2026 investor letter:

"Rentokil Initial plc(NYSE:RTO) was our largest detractor, costing about 270 basis points, most of it in July and again in September. The first-half report on July 30 was a case of fine financials and a broken story. Growth and margins improved, and leverage fell into the target range for the first time since the Terminix acquisition. But North American growth slowed, lead flow weakened into July, door-to-door, a pillar of our thesis, went undisclosed, and management retired its 2027 North American margin target. The shares fell about 21% on the report. We trimmed the position in September and exited the position after quarter-end. Rentokil has historically lagged its closest peer Rollins on operational metrics. We expected this gap to close over time and, with that, valuation to re-rate higher. This could still happen, but in the meantime, we have decided to exit to focus on higher conviction ideas and revisit the story at a later date."