J D Wetherspoon PLC (JDW: LN)
12-month performance: -34%
Insider activity: Bearish
Selling pattern: Large sale from Chairman
Recent news: Reopened pubs on 4 July
J D Wetherspoon is a UK-based pub and hotel operator. Founded in 1979, the company owns nearly 900 pubs across the UK as well as nearly 60 hotels. It is listed on the London Stock Exchange and currently has a market capitalisation of £1.1 billion.
J D Wetherspoon has experienced challenging conditions in 2020. Due to UK Covid-19 lockdowns, all of its pubs were closed between March and early July. This is likely to have significant consequences for the company’s FY2020 financial performance. Earlier this month, pubs in the UK were allowed to reopen. However, with Covid-19 lingering, the company is likely to continue experiencing challenging conditions in the near term. According to a recent survey by the Office for National Statistics (ONS), only two out of 10 adults in England, Scotland and Wales say they would be happy to have a sit-down meal as restrictions ease.
Source: 2iQ Research
What stands out to us here is the fact that Chairman and Founder Tim Martin sold a substantial amount of JDW shares last week. On 10 July, the insider offloaded 510,725 shares at a price of £9.84, generating proceeds of £5.03 million. Now, there are plenty of reasons why insiders sell shares. A one-off sale like this is not necessarily a bearish signal. However, given the magnitude of this sale, and the fact that the environment is likely to remain challenging for the UK hospitality sector in the near term, we think caution is warranted towards J D Wetherspoon at present.