Every little helps

Sonnenblumen · 02-09-2014 05:46PM #1

I've been tracking the SP for months now and finally took the plunge this morning and in at < £ 2.30.

Despite 75% reduction in divi (still > 1.0% which is better than most Bank Deposit rates), Profit warnings x 2 in recent months, the SP has been overworked and now at levels not seen for 10 yrs +).

Time will tell, but plenty of upside here in a few years.

lucky john · 02-09-2014 07:27PM

Sonnenblumen wrote: »

I've been tracking the SP for months now and finally took the plunge this morning and in at < £ 2.30.

Despite 75% reduction in divi (still > 1.0% which is better than most Bank Deposit rates), Profit warnings x 2 in recent months, the SP has been overworked and now at levels not seen for 10 yrs +).

Time will tell, but plenty of upside here in a few years.

Having a look at this at the moment. Speculation is that the new ceo wanted all the bad news out before he took over. Whats holdings me back is the relentless advances of the two Germans. You can see it every day here and I suspect its no different in the uk. Its unlikely they will ever have the market share they once had but is that fact reflected in the share price today.

Value Hunter · 06-09-2014 11:21PM

I was keen on Tesco but just couldn't make the numbers work for me. Once they sort the house out they will be a £1 - £2 billion profit per year company, but even so I couldn't justify buying at a £18 Billion market cap.

I came to a net shareholder asset value of £12.76 Billion after combing through the balance sheet, and I used £1.2 Billion for their annual profit projection (conservative due to their poor track record lately).

Using Net Assets and 5x earnings I came to a value of £18.76 Billion, with 8.08 Billion shares outstanding that's £2.32 per share. Only slightly above the current price of £2.28.

That said, I think it can do well. I'll be buying below £1.80 and filling the boots if it dips around £1.50

lucky john · 22-09-2014 07:48AM

Value Hunter wrote: »

I was keen on Tesco but just couldn't make the numbers work for me. Once they sort the house out they will be a £1 - £2 billion profit per year company, but even so I couldn't justify buying at a £18 Billion market cap.

I came to a net shareholder asset value of £12.76 Billion after combing through the balance sheet, and I used £1.2 Billion for their annual profit projection (conservative due to their poor track record lately).

Using Net Assets and 5x earnings I came to a value of £18.76 Billion, with 8.08 Billion shares outstanding that's £2.32 per share. Only slightly above the current price of £2.28.

That said, I think it can do well. I'll be buying below £1.80 and filling the boots if it dips around £1.50

I'd say you're going to get an entry price today but is it worth it? No knowing what else is going to come out here now. It's certainly not a company you would expect of cooking the books.

euroboom13 · 22-09-2014 09:40AM

£2.09 now but who knows what the true figures are... money to be made here if you can predict bottom, but seems to be a moving target!

Sonnenblumen · 23-09-2014 12:21AM

euroboom13 wrote: »

£2.09 now but who knows what the true figures are... money to be made here if you can predict bottom, but seems to be a moving target!

we could probably say as much about many shares. there's been huge swings (daily/weekly/monthly) on many blue chip FTSE Stocks including Tesco. There's money to be made here and I think sooner than some forecasters are saying, ie within 12-18 months. But I bought for the longterm + divi.

euroboom13 · 23-09-2014 10:12AM

Could have bought and sold £2 /£2.15 yesterday @£;196 now, only for the brave .(I don't trade)

Might buy long term here shortly or wait till Santa season! seems to be a political battle behind the scene ,blackrock inc. Playing around too! Could be takeover.I know they did a lot of expansion of late !

Value Hunter · 23-09-2014 03:03PM

lucky john wrote: »

I'd say you're going to get an entry price today but is it worth it? No knowing what else is going to come out here now. It's certainly not a company you would expect of cooking the books.

Not being able to rely on the honesty of their accounts throws everything out the window. There could be impairment charges down the line, if previous management overstated earnings they could also have very easily overstate assets, its a slippery slope.

Would prefer it closer to my £1.50 mark instead of £1.80 with these latest developments.

lucky john · 23-09-2014 08:21PM

Value Hunter wrote: »

Not being able to rely on the honesty of their accounts throws everything out the window. There could be impairment charges down the line, if previous management overstated earnings they could also have very easily overstate assets, its a slippery slope.

Would prefer it closer to my £1.50 mark instead of £1.80 with these latest developments.

Seemingly they were running a very dubious payment system with suppliers. Eg.. billed 50mil, pay 45mil after 60 days, dispute 5 mil to the point of court proceedings, agree to pay some but after 60 days more and in the mean time push the 5 mil into the next accounting period. No knowing how long that was going on or what else they were up to. Once a company lets its standards slip its unlikely to be in just one area. Results up in a few week so all is expected to come out in the wash. Buying before then would be a big gamble.. definitely a case of not catching a falling knife on this one.

Sonnenblumen · 24-09-2014 10:50PM

lucky john wrote: »

Seemingly they were running a very dubious payment system with suppliers. Eg.. billed 50mil, pay 45mil after 60 days, dispute 5 mil to the point of court proceedings, agree to pay some but after 60 days more and in the mean time push the 5 mil into the next accounting period. No knowing how long that was going on or what else they were up to. Once a company lets its standards slip its unlikely to be in just one area. Results up in a few week so all is expected to come out in the wash. Buying before then would be a big gamble.. definitely a case of not catching a falling knife on this one.

well the news over the past few days has been a right kick in the goolies for shareholders.

Surely this cannot get worse. Profits correction of £250m but still leaves £ 850m. Amazing how a company which makes c £ 1bio annual profit can see SP drop 40-50%!

euroboom13 · 25-09-2014 09:11AM

Took a small position at £193, might consider seriously around Christmas ,if bus hasn`t left the station by then.

I am a contrarian investor ,so I normally buy on repetitive bad news, and this has got a right kicking.I would be surprised if this doesn't rise(but bottom is unpredictable )! good luck to the Brave.

bappelbe · 25-09-2014 10:17AM

I was looking at their price/Book value and thought about it - but reading this https://uk.finance.yahoo.com/news/3-reasons-why-tesco-plc-112505241.html
made me think that Sainsburys and Morrisons look better on that front

ulinbac · 25-09-2014 03:24PM

Was reading yesterday that their stock quoted may be over stated as stores reporting false figures to do with performance. Whether true or not I don't know.

They have an e-mail system where employees can anonymously mail to voice their concerns. Rumours on forums yesterday were saying that is how the accounting discrepancy came about. Again all speculation.

Surprised they haven't just brought all the issues out in the open as it is a good time to do so.

Value Hunter · 26-09-2014 05:01PM

http://www.thisismoney.co.uk/money/markets/article-2768581/Tesco-crisi-deepens-leading-US-investor-BlackRock-starts-dumping-shares.html

I can see this turning into a bit of a saga. I'm going to start tucking away money, hoping to jump in with quite a large chunk in a few months time at a much lower SP.

euroboom13 · 26-09-2014 05:24PM

The amount of effort going in to driving this share lower makes me greedy!

Value Hunter · 27-09-2014 02:29AM

euroboom13 wrote: »

The amount of effort going in to driving this share lower makes me greedy!

We finally found one we agree on lol. How low can it go is the crux of it, personally I think negative sentiment has a long way to go with driving the price lower.

Right now its just below a reasonable value, i expect rumours and developments to push it down towards a beaten up dog value. Then I plan on swooping in (it rarely works out as neat and tidy though)

Very eagerly anticipating the next results, hopefully (from my pov) management clear the air in one fell swoop with all the negative info made public from previous management. Unfortunately i have the feeling this farce will be drawn out over the next 6-9 months. I'm hoping the new CEO has the foresight to get everything revealed during his honeymoon period

euroboom13 · 27-09-2014 11:01AM

Is the rapid decline of Greencore due to Tesco trouble as well.
My list for santa`s getting bigger!

Value hunter ,we are both after the same prize, and our paths are bound to merge the closer we get to it. gla

lucky john · 28-09-2014 11:45PM

euroboom13 wrote: »

Is the rapid decline of Greencore due to Tesco trouble as well.
My list for santa`s getting bigger!

Value hunter ,we are both after the same prize, and our paths are bound quote]

Short term tesco will need to get all the bad news out and and sort out any cooperate governance issues. Basically restore trust so that the markets and investors actually believe what they are been told. Then it's into a bloody battle for UK market share and that means every supplier will be squeezed like never before. Irish and European suppliers will be first up because the weakening of the euro has given them a little extra margin. That will be back in tesco tills by Christmas and more along with it. I know from personal experience how these guys work and when your a pawn in an endless supermarket price war there's no mercy and suppliers are just collateral damage. Greencore and many others will be expecting their new buyers (they will switch the product buyers so that there is no relationships with company sales people) to be calling them soon.

gordongekko · 29-09-2014 03:21PM

The reality is Tesco s share price is back to where it was 10 years ago. It's hard to believe Tesco is not a better and bigger company than it was 10 years ago. I'd bet there are a lot of retail companies doing the exact same tactic as Tesco. I worked for one myself where we often did similar accounting practices so don't be surprised to hear other companies coming out with similar problems.

lucky john · 29-09-2014 04:25PM

http://news.sky.com/story/1344260/tesco-taps-banks-for-2-5bn-crisis-warchest

2.5 billion to fill a 250 million hole. Prudence, or preparation for a bigger hole?

lucky john · 29-09-2014 04:35PM

gordongekko wrote: »

The reality is Tesco s share price is back to where it was 10 years ago. It's hard to believe Tesco is not a better and bigger company than it was 10 years ago. I'd bet there are a lot of retail companies doing the exact same tactic as Tesco. I worked for one myself where we often did similar accounting practices so don't be surprised to hear other companies coming out with similar problems.

Thats a good point so you have to wonder is their more going on here. Installing the new financial director in a panic almost for a not uncommon practice and banning the last one from the place seems like an over reaction. Its an intriguing story but I'm glad to be watching from the sidelines. I'm not brave enough to call the bottom.

mazzy maz · 30-09-2014 09:05PM

This has a long way to run I reckon. Next AGM isn't until June 2015 and the board will be under constant pressure until at least then. The board is currently imbalanced with a load of non-executive directors (*none* of whom have retail experience) and only one exec (the CEO).

The chairman and the audit committee are in big trouble. I read their 2014 annual report in June for work and the first "risk of material misstatement" identified by the auditor was that of how commercial income (i.e. the kind of supplier rebates that are at the centre of this debacle) is calculated/predicted. This is actually a normal area of focus for audits at big retail firms, but in this case Tesco's audit committee specifically chose to address this aspect of the auditor's report to say that things were fine in this regard haha. They definitely need more retail experience on the board, especially on the audit committee. There's no way they have the expertise to be asking the right questions of the managers responsible for preparing the financial statements.

190p seems a fair price at the moment, but given that Tesco's financials stopped making sense as far back as 2012, you'd have to assume that more stuff is gonna be uncovered. As such, I'd be waiting for 160p. Though they're gonna go to zero in the next couple years anyway

haha

lucky john · 30-09-2014 09:49PM

Value hunter said last week €1.50 would be a safer entry price and its looking to me that anything more is not worth the risk. Leaving aside the dodgy accounts , tesco have plenty of problems to keep the new management going. In rough figures a 3 billion pension hole, 8 billion borrowings and a lease back agreement on huge out of town stores that are unprofitable. There's also the European stores that there's a debate about how profitable they are. There's press reports that the auditors are trawling through their books now aswell to see if the accounting practices were wrong there as well. Throw in Aldi and Lidil and a major supermarket war on the way and there's not much to get excited about.

euroboom13 · 03-10-2014 12:22PM

This hot knife is burning through a lot of brave hands at the moment, including my own ,but I still can't see it hitting the floor.

Value hunter might be on the button at £1.50
(£1.7015 low today)

"every little helps" when guessing bottom!
Good luck

Value Hunter · 03-10-2014 01:25PM

euroboom13 wrote: »

This hot knife is burning through a lot of brave hands at the moment, including my own ,but I still can't see it hitting the floor.

Value hunter might be on the button at £1.50
(£1.7015 low today)

"every little helps" when guessing bottom!
Good luck

I'm trying to scramble some funds together ASAP so i'm ready to pounce if needs be

lucky john · 03-10-2014 01:34PM

Value Hunter wrote: »

I'm trying to scramble some funds together ASAP so i'm ready to pounce if needs be

Fast approaching the €1.50. Will it stop there even. The momentum is such that its definitely going to over shoot a fair price. Question is whats fair. I see one trader is setting a daily buy order 20p above morning opening to catch a sudden change in direction.

Warren buffet is in deep here around £ 3.80. Will he sit tight or average down?

Value Hunter · 03-10-2014 01:49PM

lucky john wrote: »

Fast approaching the €1.50. Will it stop there even. The momentum is such that its definitely going to over shoot a fair price. Question is whats fair. I see one trader is setting a daily buy order 20p above morning opening to catch a sudden change in direction.

Warren buffet is in deep here around £ 3.80. Will he sit tight or average down?

He's selling!

http://www.bbc.com/news/business-29457053

lucky john · 03-10-2014 01:54PM

Value Hunter wrote: »

He's selling!

http://www.bbc.com/news/business-29457053

Yeah, I saw the story but he still has nearly 4% so I expect he is watching this present collapse with mixed emotions. Selling would be a huge loss but averaging down at the right entry price might look like good value now.

jank · 03-10-2014 03:16PM

I am watching this with keen interest but with all what is going on how can you trust the numbers?

Sonnenblumen · 08-10-2014 07:01AM

I am surprised with some of the comments here on this SP but then again it reflects much of the market sentiment but a great absence of logic. Tesco is despite some profit warnings continues to make profits (almost £ 1.0 BN), and yes there has been some 'odd accounting practices' but as others have indicated nothing unusual? With a very low PE and a substantive T/O, a dominant market position, go figure why grocery suppliers with a P/E ratio x 20 Tesco's PE or a SP of x 30 Tesco's ? I suspect this reflects the fundamental weaknesses of investing in shares, greed not logic is often the key differentiator.

Hopefully sense will eventually prevail and all this glooming nonsense about Tesco will go away.

Value Hunter · 08-10-2014 07:28AM

Sonnenblumen wrote: »

I am surprised with some of the comments here on this SP but then again it reflects much of the market sentiment but a great absence of logic. Tesco is despite some profit warnings continues to make profits (almost £ 1.0 BN), and yes there has been some 'odd accounting practices' but as others have indicated nothing unusual? With a very low PE and a substantive T/O, a dominant market position, go figure why grocery suppliers with a P/E ratio x 20 Tesco's PE or a SP of x 30 Tesco's ? I suspect this reflects the fundamental weaknesses of investing in shares, greed not logic is often the key differentiator.

Hopefully sense will eventually prevail and all this glooming nonsense about Tesco will go away.

That profit figure is incorrect, they had a second page of costs on their income statement after publishing 'net profit' of £970m.

Net profit was actually a loss of £859 m.

And this was before they were cooking the books

Page 73

http://www.tescoplc.com/files/pdf/reports/ar14/download_annual_report.pdf

Every little helps

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