One of Warren Buffett’s famous investing sayings is “be fearful when others are greedy and greedy only when others are fearful” – or, in other words, sell when others are buying and buy when they’re selling.
But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.
So, in this series of articles, we’re going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.
Tesco: Rising Like A Phoenix?
The FTSE 100’s favoured scapegoat these last few months, Tesco (LSE: TSCO) has reversed its downwards trend in recent days, climbing by around 4% in Monday’s trading after a wave of positive sentiment over the weekend (now when was the last time we could say that?).
One analyst — Bruno Monteyne at Bernstein Research — stated his belief that new chief executive Dave Lewis’s price- and cost-cutting plans ought to plug many of the group’s problematic areas and arrest leaking profits, upgrading Tesco to ‘outperform’. He also thought it was now less likely that the supermarket would need a rights issue to raise funds, with a cash call seemingly being priced in to the shares’ current valuation.
Elsewhere, rival Sainsbury’s lost an appeal against Tesco’s Price Promise scheme, further boosting the latter’s investment appeal (and in turn lessening the former’s, sending Sainsbury’s shares lower on the day). The concern was that it is “misleading” to compare prices of own-brand and fresh food, as they may contain different ingredients and have different origins, or whether they were Fairtrade. As it stands, Tesco can boast that nine out of 10 of its Price Promise baskets are cheaper than Sainsbury’s.
Buffett’s Bare Basket
The tail end of last week brought news on just how much Buffett lost on his Tesco investment in the third quarter: a staggering £427.2m.
But if Buffet’s oft-quoted mantra about fear and greed is correct, with the market so fearful, now could be the right time to buy. And that’s exactly what a lot of customers of the Motley Fool’s ShareDealing service have been doing. They put Tesco firmly in the number 1 spot in the latest “Top Ten Buys” list*, with almost three times as many investors buying the supermarket’s shares as selling.
Of course, no matter what other people were doing last week, only you can decide if Tesco really is a “buy” now.
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Sam Robson has no position in any shares mentioned. The Motley Fool UK owns shares of Tesco. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
* based on aggregate data from The Motley Fool ShareDealing Service.