brokers views

Ifts

moneylover wrote: »

thanks - I just bought some shares in Tesco - at least all the analysts agree its a buy!!
Warren Buffet is in a different league to me and my paltry little investments.

Forget the analysts, seems like Billionaire investor Warren Buffett also agrees with your buy!

His company Berkshire Hathaway has raised its stake in retailer Tesco to 3.64% from 3.21%: https://www.share.com/cgi-bin/oicgi.exe/inet_tsc_dl2?pass=1&csi=10091&action=news&story_id=4540113

Bloomberg wrote:

Tesco gained 1.7 percent to 371.4 pence. Buffett raised his stake in the retailer to 3.64 percent, a person familiar with the matter said. Buffett’s Berkshire Hathaway Inc. increased the holding from 3.21 percent, according to the person, who declined to be identified because the information hasn’t been made public.

http://www.bloomberg.com/news/2011-09-25/3i-group-charter-lloyds-unilever-u-k-irish-equity-preview.html

moneylover

According to Evening Standard apparently a lot of people held off shopping over the weekend because of the price reductions starting 6am this morning. There are some useful ones. I mourn my double points though, I use them to get 3 times value in train fares just about the most useful and transparent way of spending the vouchers. I boost the points by having a Tesco credit card and buying everything over about £1.00 on it.

Ifts

The £350m Tesco's save from stopping the double points promotion will help pay toward the £500m cost of the latest price reductions promotion..... Swings and roundabouts!

moneylover

but the price reductions may gradually get eroded and the double points are unlikely to come back. To be fair though they have reinstated 4 times points on some offers - although mostly restuarants that give you two for the price of one, Monday to Friday, for nothing

gadgetmind

moneylover wrote: »

a sell from Goldman Sachs

Always - and I do mean always - ignore Goldman Sachs.

IronWolf

While we're talking about Tesco, just thought I'd throw in my 2 cents.

Seems the rare occurance where I actually agree with most investment managers and brokers. I'm heavily invested in Tesco for numerous reasons, 20% of my portfolio in fact (who needs diversification lol). Firstly starting with their track record, over the last 10 years they have greatly improved market share and have expanded in areas outside of retail, which imo is good as retail is a low margin business with fierce competition.

On the surface, Morrisons appear a better business as they are growing faster, but digging deeper you will see that they have been growing at the expense of their operating margins, i.e. slashing their prices for market share. Tesco haven't done this, they have infact IMPROVED their operating margins whilst increasing market share which means they have far more scope to continue profitable growth and is a sign of a good management. Morrisons will eventually run out of margin to eat into.

Also Tesco and Tesco finest brands are now the best selling (individually) in the UK. That means that Tesco and tesco finest together sell more than double even Coca Cola's brands (in £ terms). So their market share goes beyond just retailing, and is part of how they've driven operating margins upwards over the last 10 years.

Looking forward, they've moving into the higher margin business of banking, and also constructing malls in the East, which gives them not only revenue on sale, but the best locations for their Tesco stores in these malls. In the UK, they have the highest customer loyalty of any supermaket by a very considerable margin.

All in all, I'm very bullish on Tesco, and think they're a bargain at todays prices. IMO they are the best supermarket in terms of business fundamentals (I wouldnt say their stores are necessarily the best).

I was glad to find out Warren Buffet has also invested in them, I must be doing something right in my analysis of companies

IMO their intrinsic value is around £45-55bn, so currently being at £30bn market cap makes them a steal. I won't be selling unless they sell for more than intrinsic value, say £60bn in the next year or two, even then I'll be tempted not to take even a 100% profit. I'm prepared to hold them for 10-20 years as their intrinsic value is ever increasing, which is why I put such a huge chunk of my portfolio in them.

(p.s. Im not ramping, honest, I wouldn't have invested my money if I didn't really believe all the things I said )

gadgetmind

IronWolf wrote: »

(p.s. Im not ramping, honest, I wouldn't have invested my money if I didn't really believe all the things I said )

Ramping even small caps is hard and ramping a mega cap like Tescos takes the might of Goldman Sachs.

I wanted to buy Tescos but my wife vetoed and I went for Sainbury instead.

IronWolf

Oh no not sainsburys, by far the worst supermarket in terms of operating margins and growth

gadgetmind

IronWolf wrote: »

Oh no not sainsburys, by far the worst supermarket in terms of operating margins and growth

Let's see how the yields go over the next couple of years. Any disappointment and I might switch to TSCO without telling her. :-)