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Jack


We are currently experiencing a barrage of Leisure updates as operators scramble to process the implications of a sustained lockdown and consequent financial aid packages. These updates are worth a dedicated report in themselves.

I haven’t had the time to properly process some of these updates but there could be some high risk / high reward opportunities. I do stress the “risk” part, though - there is the very real possibility of equity getting wiped out in these uncertain times, and we are still in the early stages. There were some huge share price moves yesterday - in both directions.

The companies going up were:

Some companies going down included:

There is still a lot of uncertainty hanging over pubs, bars and other leisure and retail outlets. Forecast earnings don’t count right now and the market doesn’t know how to value these shares.

At some point I would like to take a look at these companies, but there may not be time today as the RNS feed is already filling up. At present, I feel like there are two big plays in this market:

  • Quality, growing companies trading at a discount, and
  • Companies with bombed out shares that are priced to go bust but will ultimately survive.

What does everyone else think? The top option is much less risky. Most of Leisure now falls into the bottom. There are also a lot of “do nothing” investors out there who have picked companies they have conviction in and remain fully invested. If you can handle the volatility and are confident in the companies you own, that is a totally valid position to be taking.

I’d like to…

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