I posted before about Tesco, with Warren Buffett increasing his stake in the UK supermarket chain, and Woodford selling all his shares.
I wrote:
"Below is the share price of the last 5 years, the stock hasn't done much and might thus be relatively cheap, it pays a decent dividend. Also, it is not often that one can buy a share at a decent discount to the price that Warren Buffett paid. But Woodford's selling does look like a red flag, Woodford is playing a home game in the UK, Buffett is playing away. I prefer to wait, there is anyhow not much good economic news lately, markets look jittery."
The question who was right, Buffett or Woodford, seems to have been answered in a very clear way:
"Warren Buffett: ‘Tesco was a huge mistake’", from an article in The Guardian. Some snippets:
Renowned US investor Warren Buffett has said he made a “huge mistake” by investing in Tesco, as the problems mount at Britain’s largest retailer.
Tesco shares have slumped 45% this year as the supermarket issued four shock profit warnings and last week became embroiled in an accounting scandal, admitting it had overstated its profits by £250m. The retailer has been the worst performer in the FTSE 100 index this year and its shares are at an 11-year low.
Undaunted by a shock profit warning from the company, Buffett raised his stake to over 5% when others were selling the stock. Tesco was the only stock in his top 15 picks that recorded a loss last year. Buffett told CNBC: “I made a mistake on Tesco. That was a huge mistake by me.”
The UK’s financial regulator has launched a full-scale investigation into the accounting scandal that has plunged Tesco even deeper into crisis. The retailer’s new boss, Dave Lewis, is tasked with restoring Tesco’s battered reputation as well as fixing its business amid rapidly declining sales.
Meanwhile, star UK fund manager Neil Woodford – who decided to sell his stake in Tesco in 2012 after its first profit warning – said last week it could be a long time before any of the British supermarkets became good investment prospects again.
It takes a good investor to admit his mistake, and Buffett (despite the Tesco investment) must indeed be deemed to be one of the best (if not the best) investors of all times.
Showing posts with label Neil Woodford. Show all posts
Showing posts with label Neil Woodford. Show all posts
Friday, 3 October 2014
Tuesday, 4 February 2014
Tesco: Buffett vs Woodford
I have often blogged about Warren Buffett but never about Neil Woodford, a fund manager who is rather famous in the UK. The two are squaring off on Tesco, the large global supermarket chain.
From the website of the DailyMail (Mail Online):
"Buffett vs Woodford: Two years after watershed Tesco profit alert, which legendary investor called it right?"
Tesco dumbfounded investors with a profits warning two years ago.
It also unwittingly created a face-off between two legendary investors, American billionaire Warren Buffett and British fund guru Neil Woodford, who laid opposing bets on the supermarket giant's future prospects.
To recap, very few saw Tesco's profit alert coming despite some rumblings of discontent about problems neglected under the regime of ex-boss Sir Terry Leahy. On the day the news broke in January 2012, shares in the company plummeted 16 per cent and closed at 323.45p.
But it wasn't clear whether Tesco had just suffered a temporary trading setback that Christmas or was in much deeper trouble.
Ordinary shareholders were torn between seizing the chance to buy in on the cheap or dumping the stock. Then a couple of extraordinary shareholders waded in on different sides - Buffett increased his stake, while Woodford sold all his stock in the company.
It's easy at this stage to say Woodford was right.
A couple of years on and despite valiant attempts by current boss Phil Clarke to turn the business around, Tesco's stock is still hovering around the 320p mark.
It's off the worst lows during this grim stretch for shareholders, but remains around 17 per cent lower than the 385p closing price on 11 January 2012 - the day before the watershed profit warning.
And with no sign of a robust recovery in sight, Buffett looks like he's starting to have doubts about his investment. He sold off some, but not all, of his stake in Tesco last autumn.
His firm Berkshire Hathaway holds 3.18 per cent of the supermarket's stock and is still its fifth biggest shareholder.
But after just two years, it's probably too soon to say Woodford has won this unintentional stand-off with Buffett.
Both Buffett and Woodford are contrarian investors who pursue long-term strategies. They are more than likely indifferent to whether the wider world judges their investing decisions as wrong - or right - over very extended periods so long as they make money in the end.
Below is the share price of the last 5 years, the stock hasn't done much and might thus be relatively cheap, it pays a decent dividend. Also, it is not often that one can buy a share at a decent discount to the price that Warren Buffett paid.
But Woodford's selling does look like a red flag, Woodford is playing a home game in the UK, Buffett is playing away. I prefer to wait, there is anyhow not much good economic news lately, markets look jittery.
From the website of the DailyMail (Mail Online):
"Buffett vs Woodford: Two years after watershed Tesco profit alert, which legendary investor called it right?"
Tesco dumbfounded investors with a profits warning two years ago.
It also unwittingly created a face-off between two legendary investors, American billionaire Warren Buffett and British fund guru Neil Woodford, who laid opposing bets on the supermarket giant's future prospects.
To recap, very few saw Tesco's profit alert coming despite some rumblings of discontent about problems neglected under the regime of ex-boss Sir Terry Leahy. On the day the news broke in January 2012, shares in the company plummeted 16 per cent and closed at 323.45p.
But it wasn't clear whether Tesco had just suffered a temporary trading setback that Christmas or was in much deeper trouble.
Ordinary shareholders were torn between seizing the chance to buy in on the cheap or dumping the stock. Then a couple of extraordinary shareholders waded in on different sides - Buffett increased his stake, while Woodford sold all his stock in the company.
It's easy at this stage to say Woodford was right.
A couple of years on and despite valiant attempts by current boss Phil Clarke to turn the business around, Tesco's stock is still hovering around the 320p mark.
It's off the worst lows during this grim stretch for shareholders, but remains around 17 per cent lower than the 385p closing price on 11 January 2012 - the day before the watershed profit warning.
And with no sign of a robust recovery in sight, Buffett looks like he's starting to have doubts about his investment. He sold off some, but not all, of his stake in Tesco last autumn.
His firm Berkshire Hathaway holds 3.18 per cent of the supermarket's stock and is still its fifth biggest shareholder.
But after just two years, it's probably too soon to say Woodford has won this unintentional stand-off with Buffett.
Both Buffett and Woodford are contrarian investors who pursue long-term strategies. They are more than likely indifferent to whether the wider world judges their investing decisions as wrong - or right - over very extended periods so long as they make money in the end.
Below is the share price of the last 5 years, the stock hasn't done much and might thus be relatively cheap, it pays a decent dividend. Also, it is not often that one can buy a share at a decent discount to the price that Warren Buffett paid.
But Woodford's selling does look like a red flag, Woodford is playing a home game in the UK, Buffett is playing away. I prefer to wait, there is anyhow not much good economic news lately, markets look jittery.
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