Market Report: US enthusiasm puts a good head on JD Wetherspoon

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The Independent Online
Pub management companies, a relatively new breed as far as the stock market is concerned, continue to command glamour ratings, with JD Wetherspoon leading the pack.

Wetherspoon jumped 41p to an 832p peak after it disclosed that it had raised pounds 13.5m selling shares to US investors. This sale occurred despite chairman Tim Martin's comments earlier this month that he was well blessed with bank facilities.

It is, however, the US love affair with Wetherspoon that is intriguing the market. After all, US institutions are not renowned for appreciating or supporting UK pubs. Indeed several of the pub buy-out schemes, put into place after the Government's ill-fated Beer Orders forced the big brewers to sell many of their pubs, were abandoned when promised US support was withdrawn once top management got involved.

Yet Wetherspoon, selling at more than 32 times last year's earnings, is pulling in the American punters. Janus, a large US fund, has 16.21 per cent and even before the latest placing, involving 5 per cent of Wetherspoon, it was estimated that US investors had more than 40 per cent of the company's capital.

Wetherspoon, with more than 100 pubs, came to market at around 158p four years ago. The dramatic upsurge has already prompted some City analysts to suggest that the shares should be regarded as a sell. Williams De Broe, forecasting profits of pounds 305m this year against pounds 264m, hung a sell sign over the shares.

Takeover hopes have helped to ferment Wetherspoon's heady performance, with Bass and recently Greenalls regarded as the mostly likely to strike. Regent Inns, another managed pubs group, has also enjoyed a soaraway market life, climbing from 135p to more than 1,000p.

But as the managed pub chains prosper, the tenanted operations remain in the doldrums, with most close to their flotation levels.

The market remained under the BSE whip, with many food shares drifting lower. Overall sentiment was depressed by the implications of the beef disaster, particularly its impact on the nation's economy. Government stocks lost more than half-a-point and sterling remained under some pressure on the foreign exchange market.

Glaxo Wellcome was 23.5p healthier at 835.5p as the company held investment meetings in the City. Talk of a takeover bid for Pfizer, the US group, was dismissed.

P&O, duly confirming the proposed sale of its Bovis building side, gained 8p to 522p, despite the signalled profits slump.

Leading oils were strong as the crude price stayed firm and confident noises emerged from a US oil conference. British Petroleum gained 12.5p to 568.5p and Shell 7p to 865p.

Holliday Chemicals gained 9p to 122p. The group upset its supporters with a profits warning in January and earlier this month duly confirmed figures of pounds 15.4m against pounds 19.3m. There is, it appears, a growing well of support, with the drug operations creating interest. SBC Warburg and Kleinwort Benson are said to be positive on the shares. Target price is put at 150p.

Tomkins, the buns-to-guns conglomerate, added 2.5p to 260p with talk of a share buy-back merging with buy support from Warburg.

Food shares again presented a sorry bunch. Dalgety fell a further 11p to 413p; Northern Foods 3p to 180p and Unigate 7p to 400p. There were signs of a rally, or, perhaps, dead-cat bounce in some slices of the industry. Robert Wiseman rose 13p to 150p and Sentry Farming , which said BSE was "unlikely to materially affect" profits, 9p to 168p.

Worries about today's figures from Kingfisher, which are expected to embrace a shake-up at the B&Q do-it-yourself chain, lowered the shares 15p to 533p.

Vodafone slipped 2p to 248p ahead of today's Orange launch. The Orange flotation is expected to be struck at around 205p; dealings start early this afternoon and a short-term level of 250p is predicted. Such a price should result from Orange's inclusion in the FT-SE 100 index, which should force Footsie funds to scramble for the shares. Once they are satisfied the shares could fall back.

The Securicor revamp lifted the voting shares 218p to 2,023p; the non- voting "A" 120p to 1,175p and Security Services 118p to 1.168p.

Micro Focus, the computer group, responded to the arrival of a new chairman and chief executive with a 57p rise to 650p; Filtronic, on a profits warning, lost 22p to 353p; Panmure Gordon is going for little-changed profits of pounds 3.5m.