Leisure business Whitbread (WTB) shot to the top of the FTSE 100 leaderboard in early trading on Monday as another activist investor stake builds.

Whitbread confirmed that US activist hedge fund Elliott Capital Advisors now owns a 5.3% interest in the company’s shares after transactions last week.

That sparked a near 7% jump in Whitbread’s share price on Monday to £41.97, the highest the stock has been in nearly a year.

WHY ELLIOTT CAPITAL IS EXCITING FOR INVESTORS

‘In a nutshell, there is a widely-held belief that Whitbread should separate its Costa Coffee business from the Premier Hotels operation,’ explains Russ Mould, investment director at investment platform AJ Bell.

‘They are very different businesses and could be worth more as separate entities rather than as part of the current leisure conglomerate.’

Splitting Whitbread up is not a new idea, and rumours that such a move is in the offing have been doing the City rounds for weeks.

UNDER THE ACTIVIST GUNS

Elliott is also not the only activists on the Whitbread books. It joins fellow investor Sachem Head Capital, which owns just shy of 3.4% of the stock. Much like Elliott, Sachem is a hedge fund with a history of piling pressure on firms to overhaul their operations to boost performance.

Sachem had previously targeted rare diseases specialist Shire (SHP). It is now in negotiations that may see it taken over by Japan’s Takeda.

Elliott also has a reputation for forcing through change. ‘Perhaps best known for shaking up investment trust Alliance Trust (ATST) and its current drive to reshape BHP Billiton (BLT),’ says AJ Bell’s Russ Mould.


Issue Date: 16 Apr 2018