The Pub Curmudgeon - Putting your money where your mouth is
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Twenty-five years ago, the CAMRA Members’ Investment Club was created, with the declared objective of investing in companies producing and selling real ale. Since then, it has gone from strength to strength, with the value of its holdings now adding up to an impressive £17.2 million. One of the benefits of investing in traditional integrated brewing companies is that their property portfolios provide a cushion against losses. If the company is successful, then its share price will rise, but if it isn’t, it won’t go bankrupt, it will be taken over by someone else with an eye on the value of the tied estate.
While obviously the genteel poverty of Curmudgeon Towers precludes any large-scale stock market speculation, I have to say I have squirrelled a few mites away in this over the years and it hasn’t done too badly. One its fundamental principles is that, unlike a conventional unit trust, it doesn’t actively trade its holdings – they are allowed to progressively accumulate and only sold if the company concerned is taken over or ceases to be involved in the pub and brewing industry. The CMIC holding also provides a buffer against hostile bids.
However, it has now been attacked for having holdings in the pub companies that have been so heavily criticised by CAMRA. However, this rather misses the point. Owning shares in a company does not imply that you support the policies of that company, and indeed allows you to attend the Annual General Meeting and may enable you to exercise some leverage over it. In fact, the holdings in Punch and Enterprise are now of pretty trivial value, which reflects the collapse of those companies’ share prices in recent years.
Currently the club has holdings worth over £1 million in Fuller’s, Greene King, Marston’s, Shepherd Neame, Wetherspoon’s and Young’s, none of which have been entirely immune from CAMRA criticism over the years. It needs to be pointed out that the shares of some substantial brewers such as Charles Wells, Robinson’s and Samuel Smith’s are entirely privately held and so not available to outside investors.
Another criticism that in the past has appeared in the comments on this blog is that the club has been unwilling to “put its money where its mouth is” and make speculative investments in brewery and pub company start-ups. However, a key principle is that it is meant to be a serious investment, not a gamble, and only to buy shares in established companies with a sound track record. Quite a number of people (not me) have amassed individual holdings worth over £50,000, which must form a large chunk of their overall savings. If it started acting as a venture capital operation, then I’m sure a lot of people would not hesitate to whip their money out.
Having said that, it has recently made investments in a couple of micro-breweries – Black Eagle and West Berkshire – that seem to have good prospects. It has also amassed holdings of 9.6% in Hop Back and 8.7% in Black Sheep which to my mind run the risk of compromising its independence. If it was up to me I’d probably limit it to 5% of any one company.
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