Hamish Champ: When will shares in pubcos finally turn?

I was having a chat with a friend the other day about when we thought share prices for the listed pubcos would turn for the better.

We weren't talking about the odd upward blip because there's an 'r' in the month or the sun had shone for 20 minutes at the weekend. No, we were thinking about when those with the money to invest - pension funds and the like - decide that there is a healthy, viable, long-term future in the various companies whose stocks have taken such a hammering in recent months. If they decide that at all.

The discussion was prompted by news that a couple of brokers - Landsbanki and Credit Suisse - had taken a decidedly bearish stance on Enterprise Inns, as the economy slows to a snail's pace and the leased and tenanted model faces the sort of pressure pessimists can only dream of while at the same time listening to obscure 'death metal' music played by weird people from Norway.

Given that the stock market takes a view six months or so ahead of when it actually thinks things will happen, the continuing gloom, doom and despondency emanating from some quarters of the Square Mile can give scant encouragement to investors or company executives alike.

So, however small such a turn may be, when will things turn for the better? My friend opted for February 7, 2009. What like, roughly? I asked. No, came the reply. The 7th. The pub sector will begin its slow journey back to some semblance of recovery three days after the birthday of yours truly, my friend categorically stated. Cause for a double celebration then? Darn tootin'. Which means shares in pubcos should bottom out, oh, roundabout now. Hmm, we'll see.

Still on the share price question, whenever I speak to bosses of listed pub companies about their companies' share price the reaction towards any recent movement predictably depends on which direction it has just headed in. Up, and it shows that everything is peachy; that the corporate strategy is working and investors recognise what is being achieved. Down, and it's the fault of market-makers and investment advisers who simply don't understand the business.

There are grains of acceptable truth in both these arguments. The City doesn't get it right all the time, and a pubco can be doing the right thing for the long term and yet its shares will reflect an opposite sentiment, although one has to say the writing does appear to be on the wall this time.

Central to the 'bear' argument is how sturdy the model is under what are unprecedented times for the industry, with fewer people visiting the pub and those that do spending less money than they would have done on a scale rarely, if ever, seen before.

What I found encouraging, albeit perversely, was the coverage the latest broker notes got from the mainstream media. The world is at last waking up to the fact that the pub industry is under a lot of pressure.

That the health - or otherwise - of something as traditional and essential to the very fibre of this country as the pub is being debated at breakfast tables up and down the land should be encouragement in itself.

If people were to have such conversations in the pub, so much the better…