Simon Caufield presented his in-depth investment thesis on JD Wetherspoon (London: JDW) at Best Ideas 2017.
JD Wetherspoon is a wonderful, but misunderstood, company with deceptively conservative accounting hiding in a lousy industry and on sale at a wonderful price. It operates 926 pubs in the UK with a strategy that is radically different from competitors’. Return on core capital is 14%, return on equity 20%. Growth is likely to be in the range 4-7% plus another 3% from share buybacks. The founder and executive chairman, Tim Martin, owns ~30% of the shares. Management are good operators and great capital allocators, having bought back half the shares since 2003 – at times when the share price is cheap. Yet today, you can buy Wetherspoon at ~10 times FCF.
About the instructor:
Simon Caufield is Managing Director at SIM Limited, a UK-based investment firm. Simon founded the firm in 2007 after selling his stake in Nomis Solutions, a B2B enterprise software company he founded in 2002. Previously, Simon was a management consultant for more than a decade, including at Mercer Management Consulting. He also writes the “True Value” investment newsletter for MoneyWeek, a UK financial magazine. Simon has an MA in Engineering from Cambridge University.
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