Updates and Ideas

Whitbread - £1bn rights issue provides strong recovery platform for budget hotels

July 2020

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Experienced investors may remember Whitbread as a blue chip in the world of brewing and pubs. It floated way back in 1889, before amassing over 10,000 mainly tenanted pubs as well as owning blocking stakes in many quoted regional pub cos. But a crack-down by the Monopolies and Mergers Commission forced it to significantly downsize its pubs estate and after completing its exit early in the new millennium, it switched to faster growing markets such as hotels, health & fitness and Costa Coffee. In 2004 a decision was made to focus on budget hotels and Costa Coffee shops, which presaged a remarkable purple patch for the shares, which raced from 355p in 2000 to a peak at over £47 in 2015. Costa was an outstanding success, increasing outle ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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