Tesco shares

[jonah35]

Thoughts on price?

[fat80b]

They are about 1.72 at the moment and look better value every day. (But I thought that at 2.20 and at 1.98 and at 1.92)...

There are many articles out there that claim that now is a buying opportunity and many more that say don't touch them with a bargepole.

Personally, I am already in (and down) on them and looking to buy some more as a long term hold strategy (10 years). It is just a matter of when?

I think you have to ask yourself - has all of the bad news come out yet? The way they keep falling, I would guess not - perhaps the next news announcement is the point it turns around, perhaps not.

I'll probably pick up some more if it looks like it is holding station but at the moment, it is still falling every day.

Bob

p.s. Only Monkeys pick bottoms, Never catch a falling knife etc.

[iphonedyou]

Personally think they're headed towards 150p, and said that initially when they hit 200p.

Freshfields are involved, PWC will be binned and a new auditor appointed - none of this inspires confidence.

[greygoose]

I suspect there may be more bad news albeit not on the scale of the £250million, the discounters have taken a real hold in the grocery market and Tesco and co will have to sacrifice profits if they are going to compete on price with them. The number of home delivery vans you see around nowadays shows how the market has changed and they could have a lot of overly large stores that are not needed as much and are costly to keep going. Perhaps they can get back on track but it could take a while, just look at Sainsburys and M&S.

[PF62]

greygoose said:

The number of home delivery vans you see around nowadays shows how the market has changed and they could have a lot of overly large stores that are not needed as much and are costly to keep going.

With Tesco now charging as little as £15 per year for deliveries (minimum £25 order), you have to ask why anyone would bother visiting their stores.

[Simpo Two]

greygoose said:

I suspect there may be more bad news albeit not on the scale of the £250million, the discounters have taken a real hold in the grocery market and Tesco and co will have to sacrifice profits if they are going to compete on price with them. The number of home delivery vans you see around nowadays shows how the market has changed and they could have a lot of overly large stores that are not needed as much and are costly to keep going. Perhaps they can get back on track but it could take a while, just look at Sainsburys and M&S.

Tesco spent years fighting for PP to build a store in my town. After several attempts and a suspicious closed-door meeting with councillors, they got it. And then they decided not to build the store after all. That leaves half a derelict industrial estate - the land of which they bought and then used the 'eyesore' factor as part of their PR campaign - still derelict. They could at least sell it to Morrisons!

[anonymous-user]

Simpo Two said:

Tesco spent years fighting for PP to build a store in my town. After several attempts and a suspicious closed-door meeting with councillors, they got it. And then they decided not to build the store after all. That leaves half a derelict industrial estate - the land of which they bought and then used the 'eyesore' factor as part of their PR campaign - still derelict. They could at least sell it to Morrisons!

At least now they own it no else will consider opening a supermarket there ?

[Gargamel]

If it hits 150 then surely they are a takeover target.

Getting to the point where the assets are worth more than the ongoing business?

[GTIR]

fat80b said:

p.s. Only Monkeys pick bottoms, Never catch a falling knife etc.

It's amazing how many experts on this forum sign off their "informed" post with that or a similair clique saying, as if that makes their post gold gilded 100% fact!

The majority of people who buy shares do it for short term gains imo. Tesco is a long termer.

[Simpo Two]

speedyguy said:

At least now they own it no else will consider opening a supermarket there ?

We need one to keep the local CoOp honest - currently they are getting worse and more expensive!

As in the shelf of Strongbow I saw recently where they hadn't removed the old price tag.

Old price tag: '£7.50'
New price tag: 'ONLY £8.00'.

[eliot]

speedyguy said:

Simpo Two said:

Tesco spent years fighting for PP to build a store in my town. After several attempts and a suspicious closed-door meeting with councillors, they got it. And then they decided not to build the store after all. That leaves half a derelict industrial estate - the land of which they bought and then used the 'eyesore' factor as part of their PR campaign - still derelict. They could at least sell it to Morrisons!

At least now they own it no else will consider opening a supermarket there ?

Tesco bought up the old Aston Martin factory in Newport Pagnell and managed to get PP despite plenty of opposition. It's still sat there empty - PP expires shortly too.

[Simpo Two]

Perhaps the ruthless machine that is the Tesco 'Getting PP Department' will split off and do consultancy?

[covmutley]

I think that department is gone now.

Also heard that they have big land problems. Too many big stores. They were also buying up sites too quickly and signing legal agreements with all sorts of payments due in order to get the consents. These, apparently, don't seem like good deals now, but they are locked in.

[gaz1234]

Fold?

[paulrussell]

Tesco have stopped building new stores - well that's what staff were told around 3 years ago. They have also spent £2 billion refurbishing stores and hiring more staff. I do see a time where some stores will have to close, as I think Tesco built more than stores what the available market is, in the hope the increase in customer base continued. That plan has backfired and now Tesco are really paying for it.

I don't think Tesco will be bought out, as the board believe the company can sort itself out. They might have a few troublesome years, but I do think they can come bouncing back. I think shares are a good buy in the long term - say 10 years or so.

[iphonedyou]

Gargamel said:

If it hits 150 then surely they are a takeover target.

Getting to the point where the assets are worth more than the ongoing business?

Depends on how the assets have been valued - a lot of their biggest stores, arguably those that most poorly reflect market sentiment, are on very long leases. This is worth a read, too. Think it requires a free sign up, apologies.

http://ftalphaville.ft.com/2014/09/22/1979462/tesc...

I've structured sale and leaseback agreements for what is essentially off balance sheet borrowing using an operating lease, but that's to protect rates for traditional bank lending. That's not an excuse for Tesco so you have to ask, why do it? To artificially reduce debt.

[jogon]

It's not all doom and gloom they have just taken delivery of a fancy Gulfstream private jet ordered back in 2013.

http://www.dailymail.co.uk/news/article-2780233/Te...

Not sure how long it's going to last though. Will keep an eye out on the discount aisle

[iphonedyou]

jogon said:

It's not all doom and gloom they have just taken delivery of a fancy Gulfstream private jet ordered back in 2013.

http://www.dailymail.co.uk/news/article-2780233/Te...

Not sure how long it's going to last though. Will keep an eye out on the discount aisle

The comments on that article are scary. 'Why does a company operating mainly in the UK need a private jet?'

You can almost hear his two brain cells desperately trying to spark off each other.

[Sir Bagalot]

iphonedyou said:

Gargamel said:

If it hits 150 then surely they are a takeover target.

Getting to the point where the assets are worth more than the ongoing business?

Depends on how the assets have been valued - a lot of their biggest stores, arguably those that most poorly reflect market sentiment, are on very long leases. This is worth a read, too. Think it requires a free sign up, apologies.

http://ftalphaville.ft.com/2014/09/22/1979462/tesc...

I've structured sale and leaseback agreements for what is essentially off balance sheet borrowing using an operating lease, but that's to protect rates for traditional bank lending. That's not an excuse for Tesco so you have to ask, why do it? To artificially reduce debt.

I bought these when they were 300+ for the divi.

Only 8% of the stores are on lease.

Net asset value is 135ish

They have further to fall IMHO and will see 150.

[b0rk]

Simpo Two said:

Perhaps the ruthless machine that is the Tesco 'Getting PP Department' will split off and do consultancy?

Tesco have Spenhill for that many of the abandoned store plots will eventually end up as housing.

Tesco/Spenhill informed their planning architects to develop pure residential or residential +metro/local retail options for 200+ unbuilt store sites. The schemes are needless to say going to pushed through planning over next couple of years.