ukvalueinvestment Posted October 3, 2014 Share Posted October 3, 2014 Buffett told CNBC on Thursday: I made a mistake on Tesco. That was a huge mistake by me. I wish there had been a bit more follow-up. Okay, it was a mistake to buy at that price, but what about now? Is this a good company that has stumbled or is this a mistake period? It would have been interesting to hear his thoughts...... cheers Zorro Zorro, I can't help to jump in here and repeat what I said in previous posts. The industry is in a state of massive change. Hard discounters with tremendous resources are pulling the rug out from beneath an industry that was already viciously competitive. At the same time, the industry is moving from a model of out of town superstores to consumers visiting smaller stores much more frequently. At the same time, people are moving online. Both smaller and online are far less profitable. And why go to Tesco when you can go to Aldi and Lidl and get honest, cheap prices - rather than ridiculous "special offers" that aren't special. For a very long time, Tesco have been raising cash by doing sale and leasebacks with their pension plan. Given that their stores may have considerable deteriorations in value, the pension plan may now have a sizeable unrealised deficit. BTW, Tesco is one of the last companies to do final salary pensions (I believe). Management is completely unproven and they are in the middle of a massive accounting scandal. The ONLY reason to invest in this company is "it's cheap", but bear in mind you are buying a commodity company, with collapsing margins and an unproven management. Cheap for a reason, right? This is not a quality company, it's not a discount to book value play, it's not a reversion play, it's not a dividend play. It's not even that cheap on a forward P/E basis. I'll tell anyone on this board what I said about 30% ago. Please don't do it. Link to comment Share on other sites More sharing options...
Charlie Posted October 3, 2014 Share Posted October 3, 2014 "And why go to Tesco when you can go to Aldi and Lidl and get honest, cheap prices - rather than ridiculous "special offers" that aren't special." Because Aldi and Lidl have only a limited supply of goods and people like to have more choices of brand names, Aldi and Lidl don´t offer. Food and beverage retailing is probably the biggest business of the world, so there can be a lot of players in the market. Buffett said of Conoco Phillips it was a mistake too and you could have very good returns. I don´t buy my food and drinks at the Internet. Of course with unproven management and the accounting fraud it is not risk free, but the price you pay is terrible important and the price is great. We will see how this ends... ;) Link to comment Share on other sites More sharing options...
Zorrofan Posted October 3, 2014 Share Posted October 3, 2014 Buffett told CNBC on Thursday: I made a mistake on Tesco. That was a huge mistake by me. I wish there had been a bit more follow-up. Okay, it was a mistake to buy at that price, but what about now? Is this a good company that has stumbled or is this a mistake period? It would have been interesting to hear his thoughts...... cheers Zorro Zorro, I can't help to jump in here and repeat what I said in previous posts. The industry is in a state of massive change. Hard discounters with tremendous resources are pulling the rug out from beneath an industry that was already viciously competitive. At the same time, the industry is moving from a model of out of town superstores to consumers visiting smaller stores much more frequently. At the same time, people are moving online. Both smaller and online are far less profitable. And why go to Tesco when you can go to Aldi and Lidl and get honest, cheap prices - rather than ridiculous "special offers" that aren't special. For a very long time, Tesco have been raising cash by doing sale and leasebacks with their pension plan. Given that their stores may have considerable deteriorations in value, the pension plan may now have a sizeable unrealised deficit. BTW, Tesco is one of the last companies to do final salary pensions (I believe). Management is completely unproven and they are in the middle of a massive accounting scandal. The ONLY reason to invest in this company is "it's cheap", but bear in mind you are buying a commodity company, with collapsing margins and an unproven management. Cheap for a reason, right? This is not a quality company, it's not a discount to book value play, it's not a reversion play, it's not a dividend play. It's not even that cheap on a forward P/E basis. I'll tell anyone on this board what I said about 30% ago. Please don't do it. ukvalueinvestment, You make a compelling case that this is a broken company. I was mainly curious about WEB's comments. I wish that there would be more in-depth discussion of his investment process rather than the rather than the continuous, superficial "give us a stock tip" attitude that most interviews take with him. I am going to sit on the sidelines with a bowl of popcorn and watch how this plays out. I don't think Tesco is doomed but the blood-letting may not be over yet, In the meanwhile there are a number of other, good companies to invest in ........ thanks for the warning though.... ;D cheers Zorro Link to comment Share on other sites More sharing options...
peter1234 Posted October 4, 2014 Share Posted October 4, 2014 Tesco has taken delivery of a new Gulfstream 550 corporate jet, valued on the open market at more than $50m. Link to comment Share on other sites More sharing options...
peter1234 Posted October 4, 2014 Share Posted October 4, 2014 Earlier this week, Aldi this week announced a 35 per cent annual increase in UK sales in 2013, to a record £5.3bn. Link to comment Share on other sites More sharing options...
SpecOps Posted October 4, 2014 Share Posted October 4, 2014 Tesco has taken delivery of a new Gulfstream 550 corporate jet, valued on the open market at more than $50m. Not just that, but it now has five private jets!! http://www.bbc.co.uk/news/business-29488777 Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 15, 2014 Share Posted October 15, 2014 Tesco Breakup May Boost Buffett ‘Mistake’ Stock http://www.bloomberg.com/news/2014-10-14/tesco-breakup-may-boost-buffett-mistake-stock-real-m-a.html Link to comment Share on other sites More sharing options...
peter1234 Posted October 16, 2014 Share Posted October 16, 2014 Buffet reduces stake in Tesco to under 3 percent https://finance.yahoo.com/news/buffet-reduces-stake-tesco-under-094806746.html Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 16, 2014 Share Posted October 16, 2014 always interesting that buffett says all the time dont lose Money rule number one and then he is selling at a loss. also the same few years ago with Conoco. ::) Link to comment Share on other sites More sharing options...
petec Posted October 16, 2014 Share Posted October 16, 2014 always interesting that buffett says all the time dont lose Money rule number one and then he is selling at a loss. also the same few years ago with Conoco. ::) Well he presumably thinks he might lose from here. Interesting. I wonder why. As in, I think all the industry-wide trends were clear when he bought in. Maybe what's changed is trust in management. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 16, 2014 Share Posted October 16, 2014 always interesting that buffett says all the time dont lose Money rule number one and then he is selling at a loss. also the same few years ago with Conoco. ::) Presumably tax losses have significant value to him. I think Tesco is a much different situation than Conoco though. He made a very bad bet on Tesco. Conoco was just bad timing. Link to comment Share on other sites More sharing options...
Picasso Posted October 16, 2014 Share Posted October 16, 2014 This selling is more like JNJ. Too many mistakes by management. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 16, 2014 Share Posted October 16, 2014 This selling is more like JNJ. Too many mistakes by management. The troubling thing is that the bad management was pretty obvious a long time ago. It feels Warren was making a bet against the US dollar and thought that Tesco was a safe bet because of historical returns. I never liked that Neil Woodford was selling while Buffett was buying. Woodford would have a much better understanding of the UK market. Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 16, 2014 Share Posted October 16, 2014 Buffett’s Berkshire Hathaway Reduces Stake in Tesco Holding in U.K. Supermarket Chain Cut to Less Than 3% After Buffett Branded Stake a ‘Huge Mistake’ http://online.wsj.com/articles/warren-buffetts-berkshire-hathaway-reduces-stake-in-tesco-1413453960 Link to comment Share on other sites More sharing options...
petec Posted October 16, 2014 Share Posted October 16, 2014 He made a very bad bet on Tesco. ...so far. I still would not bet against Tesco adapting, on a long term view. Link to comment Share on other sites More sharing options...
Charlie Posted October 17, 2014 Share Posted October 17, 2014 http://finance.yahoo.com/news/tesco-boss-says-show-impact-171555416.html "In his memo, Lewis told staff that performance in its core business had improved. "Our recent performance in Food has been one of our strongest for a very long time." He also said that the firm will be adding thousands of additional hours to cope with anticipated extra demand over Christmas, traditionally the busiest time of the year for British grocers but which saw poor sales figures last year." Next Thursday earnings will be interesting. :) Link to comment Share on other sites More sharing options...
zenith Posted October 18, 2014 Share Posted October 18, 2014 Tesco Profit Shortfall 'Better Than Feared' Buffet may have trimmed a little early http://news.sky.com/story/1355802/tesco-profit-shortfall-better-than-feared Link to comment Share on other sites More sharing options...
peter1234 Posted December 9, 2014 Share Posted December 9, 2014 Tesco: big shop of horrors (Financial Times) Tesco fell as much as 15 per cent after issuing another profit warning, sparking falls in Wm Morrison Supermarkets and J Sainsbury, the index's two other supermarket constituents. Link to comment Share on other sites More sharing options...
Guest notorious546 Posted August 16, 2017 Share Posted August 16, 2017 bump Link to comment Share on other sites More sharing options...
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