Buy Shares In Tesco?

[MASSEY]

Tesco shares have dropped steadily over the course of the last 3 months, I know a little about how the value of companies is perceived and it seems to be mostly on the back of general opinion, such as how the likes of Aldi are encroaching on their customer base or little things like over valuing profit margins by 250 million.

I think investing a grand or so in Tesco for 12 months is likely to pay a great deal more than leaving it in an ISA? It's not like the share price is going to keep falling and falling is it? They still seem to have 30% of the market.

I happened to open a Morrisons account yesterday looking to see what the price differences were and found that in general Tesco were offering better prices, better quality and more variety.

Admittedly you'd be a bit pissed off if you invested at the start of the year but i've been following share prices or perceived values of things like ****** currencies and it seems that negativity of any form is enough to give most people the willies and cause them to bail which then creates a gap for people who haven't been stung to buy into the company.

 

[Matt1959]

yeh I've been keeping my eye on them. People do say that when sentiment is influencing share prices then they may be cheaper than they should be. I was thinking of buying some 7 - 10 days ago when they were 2.03. Glad I didnt as I would have lost nearly 30p per share by now! The one thing that bothers me with Tesco is that its inconceivable that the figure fiddling was for one year only. Normally when you get such discrepencies its because those that are responsible have become blase over a period of time. If they dig deeper and find out profit figures have been miss stated for the last 4 yrs what then I will watch and listen intently!!

Not a shares guru but did sell RM at their height so got that bit right!

good thread this - what opinions do others have on tesco shares?

 

[roydmoorian]

If you think they are near the bottom go for it, I would prefer to wait for the second sign of recovery. After all they do say that even a dead cat has a certain amount of bounce left in it.

 

[Faevilangel]

I had Tesco shares when I worked there for a bit (after 6 months you can buy with your wages) and I bought them at £2-£3 a share (10 years ago now) and sold most at £4.50 a share so made a killing (paid for driving lessons and first car).

IMHO after watching the shares for the 10 years I had them, you need see this as a longterm investment, the shares won't suddenly jump back to £4 a share without a lot of time, you're looking at holding them for 2/3 years to see a decent return.

I believe they will get back to £4 a share as it's a profitable business with lots of growth still available but they need to revamp their stores, sort out the accounting issue and give time for the enthusiam for Tesco to come back.

 

[Excel Expert]

Warren Buffet has called his 4.1% ownership of Tesco's a huge mistake.

http://www.theguardian.com/business/2014/oct/02/warren-buffet-tesco-huge-mistake

Mind you Tesco's are now selling off their FIVE Gulfstream jets, so that should put some money back in to the pot

http://www.bbc.co.uk/news/business-29488777

 

[Matt1959]

Royal Dutch Shell had a missstated profits scandal back in 2004. They had to pay out $352m in compensation and were fined $17m. Since 2004 their shares have bounced back by 72% whereas the FTSE made 44%

So is Tesco situation similar? - but without the benefits of oil! If it is then it could get much worse?

 

[Nuno]

The Gulfstream story might depress the price further. The Gulfstreams are not significant in monetary terms in a business that size, but (more importantly) show a management culture totally out of touch with a) it's customers's perceptions, and b) the changing (downward) status of the supermarket sector.
They'll go down before they go up, although 021's Dead Cat Bounce point is good.

 

[Excel Expert]

Matt1959 - I'm not sure, lets not forget that they have been seen dropping numbers for a while because of the Aldi and Lidl effect. That is an effect that is not going away anytime soon. As a result their share of the market has to shrink (same goes for Asda, Sainsburys and Morrisons) as Aldi and Lidl shoulder their way in to the market.

I cant see the big four ever squeezing them back out of the market, so I cant see them achieving the same levels again without finding new markets.

 

[Nuno]

Also overseas expansion has to date proved an expensive failure.
Only America shares a food system based on transporting from hubs (farmer>processor>hub>transport>supermarket) rather than one based on local markets, (mainland Europe, China).
Having failed in America there are no expansion plots available at the moment as both India and South America are restrictive in company penetration.
Bearish.

 

[Excel Expert]

I'm surprised that their march in to financial services seems to have slowed. They are still in those markets but they don't seem to be anywhere near as proactive.

Could tech be their next big market? They have been making a song and dance about their new tablet this week and it seems like an area they are keen to take advantage of.

 

[Karimbo]

IMHO after watching the shares for the 10 years I had them, you need see this as a longterm investment, the shares won't suddenly jump back to £4 a share without a lot of time, you're looking at holding them for 2/3 years to see a decent return.

This, absolute bear minimum you need to wait is to hear the Christmas performance reports and if they perform substantially better then their shares will go up in value.

Aldi, asda, sainsbury have their demographics. Tesco targeted everyone, they went for location location location and felt demographics didn't matter as long as you dominated by location alone. Come recession their poorer customers switched to aldi and Lidl which stunted their revenues.

Perhaps when the economy improves, tescos position will improve, but I think our living standard and prosperity has taken a long term dive. And our disposable income isn't about to shoot up any time soon

 

[Karimbo]

Royal Dutch Shell had a missstated profits scandal back in 2004. They had to pay out $352m in compensation and were fined $17m. Since 2004 their shares have bounced back by 72% whereas the FTSE made 44%

So is Tesco situation similar? - but without the benefits of oil! If it is then it could get much worse?

Oil is lifeblood of the world and she'll have a duopoly on it. Tesco are just resellers they are not a linchpin in food distribution. There are a hundred other companies that can replace them if it goes there

 

[MASSEY]

yeh I've been keeping my eye on them. People do say that when sentiment is influencing share prices then they may be cheaper than they should be. I was thinking of buying some 7 - 10 days ago when they were 2.03. Glad I didnt as I would have lost nearly 30p per share by now! The one thing that bothers me with Tesco is that its inconceivable that the figure fiddling was for one year only. Normally when you get such discrepencies its because those that are responsible have become blase over a period of time. If they dig deeper and find out profit figures have been miss stated for the last 4 yrs what then I will watch and listen intently!!

12 months ago their share price was 362 and it has steadily fallen.

Over the last 3 months though the fall seems to have been sharper, 289 to 172. I think that if Tesco perform well over Christmas the price could rebound quite significantly.

A good Christmas take for Tesco would suggest that a lot of the negativity has been misplaced.

I guess it is a punt for a short term win. It certainly beats leaving money in ISA's for something like 2% interest LOL.

Who would you use to buy shares in Tesco? like you i'm a bit of a novice and with all the different types of companies selling the shares and the differing fee's i want to avoid too much admin costs.

If you think they are near the bottom go for it, I would prefer to wait for the second sign of recovery. After all they do say that even a dead cat has a certain amount of bounce left in it.

The current price seems incredibly low. Mike Ashley of Sports Direct seems to think so and appears to have bought £30 million worth. I read that small time investors have also been rushing to buy, although many will have lost money as it fell a further 30p.

I definitely want to buy some at the current price and i will be praying that Tesco have a good Christmas and that they go up to 250 a share for a short term win.

 

[MASSEY]

I'm surprised that their march in to financial services seems to have slowed. They are still in those markets but they don't seem to be anywhere near as proactive.

I don't know, when ever i order my shopping at Tesco the success page after payment is full of all sorts of adverts, the most prominent being Tesco Bank Accounts, so i wouldn't say that they aren't pushing it.

 

[Excel Expert]

@MASSEY I would class that as very passive advertising for Tesco's. It doesn't cost them anything and it is just making use of empty pixels on their website. When I say they are not pushing it I don't recall seeing TV adverts for their insurance or bank accounts. (It could be after 10+ years working in motor insurance I've learnt to tune out adverts for financial products)

 

[MASSEY]

@MASSEY I would class that as very passive advertising for Tesco's. It doesn't cost them anything and it is just making use of empty pixels on their website. When I say they are not pushing it I don't recall seeing TV adverts for their insurance or bank accounts. (It could be after 10+ years working in motor insurance I've learnt to tune out adverts for financial products)

http://corporate.tescobank.com/7/videos/?mediaid=107

Don't know whether it has been on TV or not though.

They're running PPC on bank related terms too, so i think it is safe to say that they are being active in promoting it. And they seem to be outbidding the likes of Halifax and Natwest for positioning.

 

[Excel Expert]

I've probably just tuned them out. Plus the Mrs wont let me near the shopping (too many biscuits apparently) so I never use their website

 

[Matt1959]

12 months ago their share price was 362 and it has steadily fallen.

Over the last 3 months though the fall seems to have been sharper, 289 to 172. I think that if Tesco perform well over Christmas the price could rebound quite significantly.

A good Christmas take for Tesco would suggest that a lot of the negativity has been misplaced.

I guess it is a punt for a short term win. It certainly beats leaving money in ISA's for something like 2% interest LOL.

Who would you use to buy shares in Tesco? like you i'm a bit of a novice and with all the different types of companies selling the shares and the differing fee's i want to avoid too much admin costs.



The current price seems incredibly low. Mike Ashley of Sports Direct seems to think so and appears to have bought £30 million worth. I read that small time investors have also been rushing to buy, although many will have lost money as it fell a further 30p.

I definitely want to buy some at the current price and i will be praying that Tesco have a good Christmas and that they go up to 250 a share for a short term win.

I use Hargreaves Lansdown, local company to us and hugely successful in popularising investing for ordinary mortals like us. They seem very ethical and have steamlined their processes and bought costs down. You need something called a Vantage Account and its so simple whereby you transfer some money into it then buy and sell shares online at something like £6 per trade. Very helpful on the phone as well.

Back to Tesco - doesnt it bother you what more may come out? Misstating profits for previous years is a big thing and they could be hammered with penalties, fines and compensation to investors who bought shares based on an artifically inflated value. I dont think it is as simple as Tesco having a good Christmas. Sometimes maybe theres a danger in thinking something is too big to fail?. M&S still havent sorted themselves out. I think I will wait a bit for now......

what price will you buy at?

 

[MASSEY]

I use Hargreaves Lansdown, local company to us and hugely successful in popularising investing for ordinary mortals like us. They seem very ethical and have steamlined their processes and bought costs down. You need something called a Vantage Account and its so simple whereby you transfer some money into it then buy and sell shares online at something like £6 per trade. Very helpful on the phone as well.

I've opened an account with them and paid in £10 just in case there was any issues with setting it up. It all seemed pretty easy though. The website is nice.

Back to Tesco - doesnt it bother you what more may come out? Misstating profits for previous years is a big thing and they could be hammered with penalties, fines and compensation to investors who bought shares based on an artifically inflated value. I dont think it is as simple as Tesco having a good Christmas. Sometimes maybe theres a danger in thinking something is too big to fail?. M&S still havent sorted themselves out. I think I will wait a bit for now......

what price will you buy at?

If i was looking to invest more than £1000 then i think i would feel a bit more uneasy about jumping in just in case it started to tank. As you say, more negative press could be on the horizon. But if Tesco make it through relatively unscathed and they have a good Christmas take, it could start to go up considerably.

As Faevilangel says though, it could end up being a longer term investment.

It's a bit of fun and currently i wont miss the money.

 

[Matt1959]

well I went against my own advice and bought some last week at 1.78. Currently I'm about £20 up after dealing fees. Its a start I spose

 

[MASSEY]

well I went against my own advice and bought some last week at 1.78. Currently I'm about £20 up after dealing fees. Its a start I spose

If my maths serves me well, you bought about £400 quids worth?

I've got £500 in the account at the minute, to buy Tesco and will probably add a further £500 to invest in something else to make it more interesting, or maybe even 2 companies with £250 on each.

Although the £11.95 per trade eats into things if you go too small it would seem.

Bit bugged i never bought when it was at 172. I've been busy this week and quite tired of an evening so haven't had the mind frame to contemplate.

It would seem some think the price isn't likely to fall much further.

McCarthy said: "We expect further bad news on accounting, pensions and a re-basing of profits, but believe much of this is now in the price.

 

[Matt1959]

no I spent £1K. bear in mind £12 odd plus stamp fee of £5 when buying and then £12 to sell. I think I'm £12 up now after all these, as the shares have gone down a bit. Very much a newcomer ie havnt a clue lol. Seems like its only worthwhile buying quite a few shares otherwise fees eat up the gains - wish I'd bought more now. Got a bit more to spend and thinking about Debenhams

 

[MASSEY]

no I spent £1K. bear in mind £12 odd plus stamp fee of £5 when buying and then £12 to sell. I think I'm £12 up now after all these, as the shares have gone down a bit. Very much a newcomer ie havnt a clue lol. Seems like its only worthwhile buying quite a few shares otherwise fees eat up the gains - wish I'd bought more now. Got a bit more to spend and thinking about Debenhams

Ah, 1k. I didn't factor the stamp fee in my fag packet calculations.

So you pay £11.95 + a further £5 when you buy? It comes down after you have made i think 9 share purchases to the £5.95. Having researched it seems that they aren't the cheapest to buy shares with , according to what i've read on review sites about HL - but they do seem to have a nice website that is relatively easy to use.

Seems you jumped the gun a bit on the buy. I'm debating with myself now what to do. If anything i feel that it will drop lower than 170 a share. But not much. Tescos share price seems to be one of the lowest in the FTSE 100.

I still think that buying them and holding onto them for 6 months in the hope that they shoot up is worth the punt.

But part of me wants to buy something a little more volatile so that there's something worth looking at now and then.

The fee's for the first 9 trades take the fun out of it a little. Who'd want to buy £100 pounds worth of shares in a company when the fee will be in the region of 20% of the buy plus further fees when you sell. It kills smaller purchases.

 

[Matt1959]

Ah, 1k. I didn't factor the stamp fee in my fag packet calculations.

So you pay £11.95 + a further £5 when you buy? It comes down after you have made i think 9 share purchases to the £5.95. Having researched it seems that they aren't the cheapest to buy shares with , according to what i've read on review sites about HL - but they do seem to have a nice website that is relatively easy to use.

Seems you jumped the gun a bit on the buy. I'm debating with myself now what to do. If anything i feel that it will drop lower than 170 a share. But not much. Tescos share price seems to be one of the lowest in the FTSE 100.

I still think that buying them and holding onto them for 6 months in the hope that they shoot up is worth the punt.

But part of me wants to buy something a little more volatile so that there's something worth looking at now and then.

The fee's for the first 9 trades take the fun out of it a little. Who'd want to buy £100 pounds worth of shares in a company when the fee will be in the region of 20% of the buy plus further fees when you sell. It kills smaller purchases.

yes and another £11.95 when you sell so a total really of £30odd buying then selling again one particular share irrelevant of quantity.

Bit of a bummer the prices dropping! but then seems its affected everyone not just Tesco. Should have listened to my own advice lol, moreTesco figures and more info out on 23 Oct I believe which depending on whats said will make prices rise or drop?

 

[MASSEY]

Yes i heard on the radio today that Tesco will be releasing more details in the near future. Could be the make or break for either getting a bargain (if the news restores confidence) or saddling myself with shares that will dither around purchase price for months or even drop a little.

I've read various bits and bobs on the internet about Tesco shares and i would say more people are inclined to buy than to stay away. One article i read suggested the share price could go up to 260 during next year. I want to be optimistic about it

 

[Matt1959]

re. the figures to come out etc, I reckon it will be worse news purely because its inconcievable that the figures were only fiddled for one year.....

what do others think about this?!

 

[MASSEY]

Buffet has reduced his holding by a quarter.

What is it he's said in the past, be greedy when others are fearful?

I would imagine the main reason he / they are selling some is because they feel that there is alternative routes to recoup lost monies by investing in other companies. Maybe they think Tesco is going to go stale for a while and if i was them i'd want to rescue some of my losses in Tesco from potential further losses.

It's a funny old world this share buying and selling. I think it is basically a posh word for gambling isn't it? Except you'll probably rarely lose everything provided you invest in the big boys and not fly by nights.

 

[Jeff FV]

It's a funny old world this share buying and selling. I think it is basically a posh word for gambling isn't it? Except you'll probably rarely lose everything provided you invest in the big boys and not fly by nights.

Spot on - and even better if you get to gamble with someone else's money, keeping a slice of any profit but not shouldering the burden of any loss.

 

[Adwords_Guru]

No way, they are getting nipped all over the place by aldi and lidldle.

Plus the economy is on the up driving more sales towards sainsburys and waitrose.

 

[Matt1959]

Massey, come on then, what price you going to buy at?!

 

[MASSEY]

Tesco were meant to be revealing information by the 23rd, yet some of the media appear to know more of the story. And Buffett has been selling off a big chunk of his shares. Why has he been selling? My guess is he's read this sort of stuff prior to the great unwashed being able to read about it.

The investigation into the £250m accounting scandal at Tesco is understood to have uncovered evidence that a “small group” of people within Britain’s biggest retailer deliberately misled its auditors and accountants to flatter its financial results.

A senior source close to the investigation said the practices had been going on for “more than a year” on a smaller scale, but ramped up in the last six months as the pressure on Tesco sales increased.

There may be some silver lining as they think the 250 million was overstated.

In answer to your question, matt, i'll buy once the 23rd has passed and theyve dropped to 150 a share

 

[Matt1959]

http://www.marketoracle.co.uk/Article47792.html

this aint looking good for my little dabble

seems two thing at play 1) the accounting fiasco 2) shoppers deserting the stores. Even if they fix the first which according to news reports much of the bad news is out in the open now that still leaves lack of customers. My missus made an interesting comment yesterday - she is a lidl convert but popped into Morrisons and said how welcoming and how nice is was to be in there! Lidl for sure has the atmosphere of a morgue with staff faces to match.....maybe price will not turn out to be everything....

 

[MASSEY]

I read that it seems a few dodgy staff are at fault rather than the whole of tesco as machine with regards to the overstating of profits. That news seems to have contributed to the rise today. Plus they reckon the £250 mil is an exaggeration now. Although it is concerning why so many big players in the world of shares are dumping.

I'm hoping that the shares dip a little before the 23rd and i'll buy. Worst case i'll end up buying around 180. The last thing i want is for them to release a load of positive news and the shares to rocket and miss out.

I had a tesco delivery recently. They were out of mini turkey breasts. You usually get 4 mini breasts in each pack and they are 3 quid each.

They didn't have any so substituted with large packs of turkey breasts which cost in the region of 3 quid each, variant on weight, but only have 2 breasts in each pack. I ended up with 4 packs of large breasts instead of two packs of mini breasts.

Basically, they gave me £12 quids worth of meat for the price of £6!

 

[Matt1959]

well tomorrows the day I reckon they'll bounce back a bit...and then Massey will be cursing or did you buy today after all?

 

[vvaannmmaann]

From todays Daily Telegraph

Five reasons not to buy Tesco shares
http://www.telegraph.co.uk/finance/...599/Five-reasons-not-to-buy-Tesco-shares.html

 

[MikeJ]

I've got £500 in the account at the minute, to buy Tesco and will probably add a further £500 to invest in something else to make it more interesting, or maybe even 2 companies with £250 on each.

Although the £11.95 per trade eats into things if you go too small it would seem.

Bit bugged i never bought when it was at 172. I've been busy this week and quite tired of an evening so haven't had the mind frame to contemplate.

Opened at 171 today. Fill your boots

 

[Matt1959]

http://www.dailymail.co.uk/news/article-2804406/Tesco-reveals-profits-fallen-91-CENT.html

lol, I read the telegraph link late last night. Black hole worse than expected, Police called in and profits down 91% WOW how the mighty have fallen. Massey called it right, dont think I'll be sellng mine for a while!!

oh and the chairmans off for good measure

 

[The Byre]

Tesco and just about all the others are built on debt, massive debt.

Aldi and Lidl are not.

 

[vvaannmmaann]

Tesco and just about all the others are built on debt, massive debt.

Aldi and Lidl are not.

That and including potential future profits in your accounts.

 

[SwissChris]

I've seen the Tesco debacle unfolding. I'm out of the markets at the moment, I do trade a lot but havn't bothered to read up on what's going on at Tesco or eye ball the charts.

You guys have inspired me to have a look to see what kind of clusterfk is unfolding on the charts.

I'll get back to you.....