Buffett Buys More Tesco!

I wonder why Buffet didn't diversify and buy shares on Sainsbury's or another supermarket instead of topping up in Tesco. Sentiment has affected both shares and I would have thought spreading the risk would be sensible.

mark878

buffet doesnt diversify - he focuses on his best pick - his measuring stick - if the others arent as good he doesnt buy them..

ive topped up some more today

I think he's very right and I bought a bit today myself with the odds that were lying aorund in my ISA account.

Pretty happy with myself, have wanted to own some tsco for ages but have difficulty buying a double-digit multiple.
Eventually the opportunity presented itself.

"Warren Buffett... takes a much longer view of things than the average stock market pundit."

Could that be one of the reasons why he often seems to do rather better than the average stock market pundit?

Tesco wss already on my watch list to top up. 20% off for short term marketing problems is a good deal in my book. I'm buying into the potential for them to role out their infrustructure and economies of scale in emerging markets. Their xmas advertising in the UK left much to be desired but that is much easier to fix than refrigerated transporetation networks in India for example. UK customer experience is a worry but they said they are making the right noises about addressing this.

As an income investor i preffered Tesco (initially) as i like the non-UK diversification I get with Tesco. I may double up with a second supermarket in the futute though.

Im with Vinchainsaw I had Tesco on my watch list for ages but couldnt justify buying with other better opportunities around.

Now bought in when the price fell and finally added them to my portfolio. I think this may turn out to be one of the buys of 2012 at the price.

From Buffett's point of view it is a no-brainer. I did hear one so called city analyst scoffing that it was probably to a degree Buffett averaging down, but like the city in general they have chosen to ignore the positives of Tesco (same with Sainsbury) because food retailers are not in vogue right now. To a degree riskier shares, banks, insurance, miners, smaller oil companies seem to be popular again at least for the moment at least.

The other thing to remember about Buffett is that he does deal in $billions and he can let time do its job because as he now owns over 5% of Tesco he will be getting a massive dividend payment year in, year out. He can afford to sit and forget. Smaller investors who bought higher than the current 329, even the long term buy and hold types, will probably feel the capital loss more even if it is only on paper. Playing with big money always makes a difference. Nevertheless, I believe Buffett is more right on Tesco than the market right now, on fundamentals and overseas growth it is cheap.

Tesco have just had a kick. When you are top of the market for so long you become complacent now they will mobilise and build in order to exceed expectations.

Its just no profit growth right, so they will still be making a profit after the expenses of reinvestment etc.

I cant remember what article I read or what the company was but it mentioned 10 years of flat growth because they were reinvesting all of the additional cash flow in order to grow when they stopped investing that money cash flow was significant and the price rose and the dividends were massive for those willing to wait and watch managements strategy come to fruition. Might have been a car company. Either way as long as you know what is happening to the capital just because it takes a hit for a year or two doesnt mean its not a good buy

"past performance is no guarantee of future results".Where have I seen that before?Does it apply to Mr Buffet?I seem to remember that the great Brian Clough got Nottingham Forest relegated in his last season.

I was told,this morning,that our local Tescos leaves a lot to be desired.

I still think markets are a bit frothy at the minute so I'm holding off adding to my current stake.

I've a feeling we may see 300p with a bad bit of macro news.

Great companies don't stop being great overnight, although a number of 'analysts' are now getting wise with hindsight and finding previous sell signals. If only we could all apply hindsight to our investments life would be so easy.

Like many others, I have had Tesco on my watch list waiting for an opportunity to buy, so I piled in when the shares dropped to 330 and took another chunk at 322. I am happy to sit on these forever (I'm thinking 20+ years) and just watch those beautiful dividends roll in every year. When the fickle footsie pendulum swings back - as it surely will - then there will be a bonus of capital growth to boot.

Investing doesn't get much more obvious than this!

Sleep tight.

BK/A's buying of TSCO on the sell off cannot come as a surprise to anyone. It's classic Buffett, and shows the retail investor by way of a real life example not only how its done, but how simple the process is. 'Remarkably unremarkable' is how he has described his approach to investing.

Remember BK/A are diversified across the UK Supermarket sector via their holding in WMT which owns Asda, so it must be a sector he finds attractive long term.

I am sure TSCO will be back on track soon with or without CEO Philip Clarke. Regarding the importance of CEO's to the value of an investment Buffett also offers this insight:

"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."

Evaluating some of the financials as to whether TSCO is a buy are outlined here: http://globaldividendgrowth.wordpress.com

According to my analysis of my wife's shopping Tesco could improve rapidly by taking simple steps. 4 pints of milk have been 'reduced' to around £1.25 in Tesco, but my wife always stops of in Lidl where it is priced at £1. If she's stopping anyway she'll pick up a few other bits she knows are cheaper and Tesco loses again.
Come on Mr. Tesco, don't be beaten on the regular basics like bread and milk and watch the profits soar. By the way Sainsbury's bake a better loaf!
My only concern with buying more Tesco is the on line competition for electricals. I forsee a fall in sales as the credit crunch bites, and I would like to see Tesco appearing in the cheapest online prices occasionally when using search engines..., after all they could afford to take a loss leading hit for the free advertising.

not sure who this Buffett fellow is, but I bet he only bought into Tesco last week because he'd heard that I'd just done the same :)

Why on earth do MF pundits go on and on about Buffet's current investment practices? He and his not inconsiderable team have to be careful not to influence share prices against the longer term interests of BH, his investment vehicle. Most of us couldn't influence prices if we put every halfpenny we had into a share.

I am far more interested in how he got to the position of being able to invest billions. That has far more relevance to what I and my own can possibly hope to achieve. It is harder work but I believe quite sincerely that we'll benefit far more in the long run for it.

As I type, the Radio 4 news tells me that WB's increased stake has pushed the Tesco share price up. To those of you who do your own research and decided to buy of your own volition before you heard about Buffet's purchase, and to those who are not interested in buying Tesco so ignored the noise, well done. To the rest of you, how many times have you been told by MF not to follow the herd and not to buy and sell on the advice of pundits?

topstar74, every great investor has made many mistakes and WB (Warren Buffet) is no exception. He has written about several of them in his annual "letter to investors". The degree of how spectacular each mistake was varies and I think how much impression it makes on each investor will vary also. The letter is written to shareholders of his investment vehicle, Berkshire Hathaway, usually in February or March. He is very old now and whilst every pundit scribbles about "his" latest investment, they are in fact talking about Berkshire Hathaway (BH) which has for a few years now had several sector experts and lead investors so we can not be sure which are, in fact, results of Buffets initiation. The same must be said of BH's "mistakes".

I hold both Tesco and Sainsburys in equal measure because to me they look the best punt in the retail sector. However, the profits warning from Tesco is a concern. Could there be a second and then a third? Just look what happened to HMV.

Empty shelves is one reason why Tesco has had to make a profit warning. I told them that several times over the past year and received the usual reassuring replies from their Customer Relations department, but no improvement: very little helps! About 20% of the popular best bargain items are out of stock somedays; and the much heralded ''Price Drops' are usually after the prices have been put up previously, which fools no one.
Aldi sells lots of the items Tesco runs out of, usually at a cheaper price, although Tesco is a more pleasant store in which to shop.
The percentage profit at Tesco and other food retailers is only about 5%, so although they have a large turnover they are not making anywhere near as much percentage profit as, say, the Financial sector, and they only pay a reasonable, not great, dividend, if that's what you want.
No doubt Warren will do alright with his shares in Tesco, but not brilliantly if their past performance is repeated. He likes retailers such as Walmart and Sears etc and it's always worth watching his purchases, but he once said that there is never only one cockroach in the kitchen. Maybe Buffett will be the inspiration to the Tesco management to look under their 'fridges!

Warren was born in 1930, which makes him 82 this year, and I believe his business partner, Charlie Munger, is rather older.
Both are still very sharp and possess a vast knowledge of investing and commonsense market know-how that we can all learn from because they pass on their wisdom free of charge everytime they speak, and in their company reports.

topstar74:

Buffett actually got it spectacularly wrong with a struggling textile company called Berkshire Hathaway. He admits the fact.

I reckon he kept the name as much as a daily reminder against hubris as anything else. His own personal scarlet letter, on some levels...

I`ve already made my biggest ever purchase of an individual share in the last couple of days...in TESCO. I`m not convinced it will go back up to where it was quickly, but the 20% fall looks like panic and over-reaction to me.

Normally I buy to hold, and to be honest if the price stays low I won`t be too unhappy to hold for years.....however on this occasion I think that if the price went up to around 350 I might be tempted to take a 10% profit and wait for further opportunities later in the year....which was my original intention, and why I`d made the funds available.

TESCO remains a very solid company for me.

Chris

RegDiversify - Note your comments but TSCO has been a long favorite
It was the first share I ever purchased in 1965 at 7/6p. Allowing for dividend growth with dividends reinvested over a period in excess of 45 years has seen the original investment multiply many times over . There is no comparison with HMV . When you next see margarine at TSCO with 20% -50% discount you will buy 2 packs -its the same with shares !