A few weeks ago, there was a large amount of coverage in the national press about the Qatari Sovereign Wealth Fund and how it is seeking to become more disciplined and focused in its investment decision-making process.
This follows years of what many commentators described as ‘trophy hunting’, where the Fund would buy trophy assets such as prime London property, leading British names such as J Sainsbury and the building of iconic landmarks such as the Shard in London.
The coverage went on to say that the Fund may have paid too much for such assets in the past and that, as a result, it would attempt to strike harder bargains in future.
However, one company that the Fund does not appear to have a stake in is Marks & Spencer (LSE: MKS) (NASDAQOTH: MAKSY.US). Indeed, this came as something of a surprise to me, as the company is one of the first names that comes to mind when I think of British high-street names. Of all the retail assets to own, Marks & Spencer must be one of the biggest trophies?
Of course, Marks & Spencer has been the subject of bid talk for many years following Sir Philip Green’s attempts to buy the retailer in 2004. Since then, rumours have persisted but Marks & Spencer remains a plc, albeit with shares benefitting from something of a potential bid premium.
However, aside from its status as a perennial potential bid target, I think Marks & Spencer looks worth buying at the moment.
Indeed, it has a loyal customer base, a diversity of operations (both regionally and the type of goods it sells), a management team with a strong reputation, a decent yield of 3.6% and a price-to-earnings ratio which is less than that of its industry group (14.7 versus 17 for consumer services). Allied to this list are forecasts for earnings per share growth of around 6% per annum for the next two years.
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> Peter owns shares in Marks & Spencer and J Sainsbury.