The markets took a beating last week as the first case of Ebola caught outside of West Africa pushed the markets into sell mode. The FTSE All-Share was down 2.3% while the M&C 20 fell 4% to 1140, reports Will Brumby of Langton Capital.
Marstons and Greene King were both down 5.1% the former having updated on Q4 trading on Wednesday. Elsewhere across the majors, Mitchells & Butler saw 6.7% wiped off the value of its shares.
Spirit’s shares fell 9.1% as investors worried that the current environment may put Greene King off bidding for the company. The market may also be getting worried about the fact that in a share for share swap, the lower Greene King’s shares fall, the less Spirit shareholders will receive in exchange for their Spirit shares. Spirit recently confirmed it will release its preliminary full year numbers on October 22.
SSP saw its shares down 7.1%. The company primarily operates in travel hubs and given the escalation in worry over Ebola, investors may be anticipating a decline in passenger numbers. The Restaurant Group which saw its shares down 3.5% may have also suffered from similar investor concerns given the company operates 62 sites in transport hubs, within its TRG Concessions business. Similarly, the 7.5% fall in Essenden’s share price may have been the result of worries over the continued popularity of communal activities like bowling should the Ebola epidemic get worse.
Punch saw £311 million added to its market cap following the completion of its refinancing deal, which has seen junior bondholders receive 85% of the new company. The shares are down 10.5% this week as the company prepares for its 20 for 1 share consolidation on Monday. Fears of a stock overhang overshadowed the shares down further as the hedge funds who now own the majority of the equity may at some point consider an exit. Punch will update on its full year trading in November.
By and large, the family brewers escaped this week’s downturn relatively unscathed, with Thwaites up 1.6%, Shepherd Neame up 4.2% and Adnams ending the week unchanged. ISDX stocks tend to have much lower liquidity meaning investors would find it harder to sell even if they wanted to, and the family brewers in general tend to have a more muted reaction to external news.”
Written by Will Brumby, an equity specialist at Langton Capital, an FCA registered leisure research firm.
