The M&C20 significantly outperformed a falling All-share Index last week, rising 0.8% to 1,149 points compared to a 1.2% fall for the All-share ending at 976 points.
Punch Taverns completed a 20 for 1 share consolidation on Monday, rebasing the shares at around 160p. However over the course of the week, the shares slid nearly 25% to 123p. Fears in the market may be that the hedge funds, who received some 85% of the company in last week’s share placing and debt for equity swap, will be looking for a way to crystallise their gains (the share placing was at just under 4p in the old form or the equivalent of less than 80p in the new form). However we’d argue that the funds know the underlying value of the shares they hold and will be unlikely to sell them at what they consider to be a discount to fair value.
Spirit saw its shares jump 4.6% to 91.75p as press rumours circulated that Greene King may submit a bid as high as 120p per share. If a bid is made and accepted by Spirit, the shares should move to within a few percentage points of the accepted bid price.
Domino’s Pizza Group, who owns the Domino’s master franchise for the UK and Ireland, saw a 4.8% rise in the value of its shares. The company reported strong sales growth in its interim results last week, and the brand owner in the US was upbeat this week regarding system sales internationally.
Greene King and Marstons saw their shares bounce back slightly having been arguably oversold last week. Marston’s shares were up 3.9% while Greene King was up 3.4%.
Similarly Essenden saw its shares jump over 13% to levels they were at before the market selloff last week.
Next week will see the deadline for Greene King to announce whether or not it intends to go ahead with a bid for Spirit on Tuesday, as well as preliminary results from Spirit on Wednesday. Elsewhere, Fulham Shore, which recently acquired The Real Greek will list on the AIM market next week.
Analysis provided by Will Brumby of Langton Capital.
