Derek Pain: Why are these pub chains giving my shares a hangover?

No Pain, No Gain

Following the fortunes of the no pain, no gain portfolio can be a deeply disturbing experience. In the past few weeks the shares of two constituents have performed alarmingly. True, the stock market, with the Washington deadlock on its collective mind, has recently been rather volatile but the sheer weakness of Marston's and Whitbread was hard to assimilate.

Marston's collapsed from 165p to 140p; Whitbread was down to below 2,950p from above 3,200p. I suppose worries about the contents of an impending trading statement could have influenced the brewer and pub owner Marston's but there seemed nothing to account for the selling of the Premier Inn to Costa Coffee giant. Possible re-positioning by one or more funds could have instigated the damage.

Last week Marston's produced a reasonable statement and Whitbread, although remaining silent, was suddenly subjected to a flurry of highly favourable comments by stockbroker analysts. As I write, Marston's is trading at around 148p and Whitbread is comfortably above 3,200p again.

In a preliminary statement covering the year ended earlier this month, Marston's revealed that only the lower end of its pubs estate had failed to perform. Sales at its top pubs were up 2.2 per cent with improved margins and at managed and franchised outlets sales were in line with last year. Profits from the leased segment were also similar to the previous year but the more bottom-of-the-barrel pubs produced lower profits with the poor weather earlier this year and disposals blamed for the shortfall. At the brewing arm, accounting for such brands as Pedigree and Brakspear, sales increased by an impressive 6 per cent

In the past five years or so Marston's has built a chain of pub/restaurants and plans another 25 to 30 with yet more on the distant horizon. In the past year it sold 130 pubs for £50m and intends further disposals, bringing in some £60m-£70m.

Chief executive Ralph Findlay talks about a more aggressive "churn" of the estate, currently 2,050 pubs. Stockbroker Jefferies quite likes the shares although its target price is only 155p, against the aforementioned 165p.

The more bullish atmosphere surrounding Whitbread seemed to centre on the reviving economy benefiting its Premier budget hotels, the Costa chain of coffee shops and the Beefeater pub/restaurants. One stockbroker, Oriel, revisited the possibility of Whitbread eventually floating off the coffee business.

Of course, I was pleased to see the revival of two old portfolio stalwarts. After all, Marston's was acquired at 95p and Whitbread at 1,105p. I realise that the stock market in recent times has not been too tolerant of investors' nerves. Since the Footsie hit a year's peak of 6,845 points in May, shares have accommodated a series of ups and downs. But the sudden descent of Marston's and Whitbread made me wonder if something was seriously amiss. Happily, any uncertainty was confined to the stock market.

I hope the duo's display will be repeated by one or two other constituents that have lost some of their exuberance. For example, shares of the Spirit Pub Co have looked friendless in the past few weeks, down from 78p to around 68p. Only announcement of any note was that investment group Schroders, which a year ago had 7.5 per cent of the capital, now has almost 14 per cent. Obviously some funds have sold but I would have thought the Schroders impact would have been more substantial.

I have always maintained that investors who are not out for a quick kill should not be swayed by sudden, unexplained movements. Patience is an investment virtue. Of course problems can arise and once the stock market gets a sniff that a group has hit trouble it takes decisive action. But more often than not when a share moves against the trend it is due to City-inspired manoeuvres.

The Marston's and Whitbread retreats were, from a small investor viewpoint, stock market aberrations. I hope the Spirit uncertainty is in the same category.

yourmoney@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Alex Salmond said he accepted 'the democratic verdict of the people'
newsSNP leader says Scotland must move forward as 'one nation'
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week