3i (LSE:III) has been the worst-performing stock of 2026 so far. But did investors just get a strong sign that things are about to turn around?
The stock has been falling this year for a very specific reason. News this week, however, might just be what the company has been looking for…
What’s been going wrong?
3i is a private equity firm. And its portfolio is dominated by one investment – a stake in a European retailer called Action.
A concentrated portfolio can be risky. And investors have been finding out what that means this year.
Action’s growth has been faltering recently. A big part of this has been weakness in France – its largest market.
The firm has attributed this to a difficult trading environment. Investors, however, are worried it might not be cyclical.
That’s caused 3i’s shares to fall as investors reassess what Action is worth. This week, however, things started looking up.
What’s the news?
Earlier this week, B&M European Value Retail reported earnings. Like Action, the company has significant operations in France.
B&M has also been contending with sales growth in France slowing in the last year. It’s been a tough market for all concerned.
The news, however, is that things have started to stabilise. And that’s a big reason why B&M’s stock surged after the report.
I think that’s also great news for 3i. If Action can get back to performing strongly in France, I think the share price could climb.
3i isn’t set to report earnings until July. But should investors consider buying the stock before then?
Time to buy?
Right now, 3i shares trade at their lowest price-to-book (P/B) multiple in a decade. That’s because investors are wary about Action’s prospects.
Source: Fiscal.ai
3i’s book value is based on its valuation of Action. The FTSE 100 firm values its stake at an EBITDA (earnings before interest, tax, depreciation, and amortisation) multiple of 18.5.
That’s very high for a retailer. And that’s why slowing growth has caused 3i’s P/B multiple to fall to 10-year lows.
If the next update reports improving growth in France, I think that could reverse. And B&M gives me reason to think it might.
As a result, I’m looking to add to my investment before the firm reports in July. This looks like an unusual opportunity to me.
Long-term strengths
3i has had a difficult time recently. Despite this, I think the FTSE 100 company has some clear long-term strengths.
Unlike other private equity firms, it invests its own cash. That means it doesn’t have to buy and sell on fixed timelines.
That’s been important recently. Action’s challenges might have masked this, but it’s kept 3i out of wider sector trouble.
I think it’s hard to overstate how important this is. It’s why I own the stock and it’s why it’s done so well – until this year.
Even if Action’s recovery isn’t imminent, I’m happy to add to my investment in 3i. And a dividend yield close to 4% helps with this.
Final thoughts
I might be wrong about the short-term outlook for 3i. But I’m happy to own the stock on the basis of the company’s long-term strengths.
Being a good investor isn’t about forecasting the next couple of months. There is, however, nothing wrong with paying attention to what’s going on.
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Stephen Wright owns shares in 3i Group.
