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Dividend Aristocrat bets on ‘perennial disappointment’ M&S

Job Curtis's City of London Investment Trust has managed 46 years of consecutive annual dividend increases.

 
Dividend Aristocrat bets on ‘perennial disappointment’ M&S

Two British household names are attempting sweeping reforms to keep up with 21st century retailing – but while investor Job Curtis has just bought shares in Marks & Spencer, Tesco’s overseas expansion remains a concern for the City of London investment trust manager.

Curtis, a value investor who counts Warren Buffett as his ‘investment hero’, has managed the investment trust since 1991, helping continue a run of 46 years of annual dividend increases. ‘I don’t know any other UK investment trusts that have done it,’ he says, though ‘dividend aristrocrats’ in the US may have matched the trust’s achievement.

Though Marks & Spencer (MKS.L) doesn’t make it into the £740 million trust’s top-10 holdings – topped by blue chips with heavy exposure to emerging markets including British American Tobacco (BATS.L), Shell (RDSb.L) and Diageo (DGE.L) – Curtis says he bought into the clothes and food retailer’s shares in the past week or so.

The company, which has just reported a fall in first-half profits for the second year in a row, has reshuffled its management team, while chief executive Marc Bolland has asked investors for patience as he seeks to turn around the group’s struggling womenswear business. 

Curtis admitted that in the past M&S had been a ‘perennial disappointment’, but stipulated that ‘I haven’t bet the farm on it’.

The fund manager seems less impressed by Tesco, which continues to push through a major turnaround plan after making a surprise profit warning in January.

Curtis cut back his holding in Tesco by a third earlier this year, worrying that the supermarket’s management had ‘overreached themselves’. Although Tesco is ‘Beginning to turn around UK… I’m more worried by overseas’.

But Curtis, who is attracted by long-standing brand names, said he is sticking with a core position in what is ‘still a very powerful company’.

Though Curtis says he fiddles with his portfolio less than rival investment trust managers, he has tweaked his top holdings, investing some money from holdings in British American Tobacco and Diageo into BP (BP.L) and HSBC (HSBA.L).

5 comments so far. Why not have your say?

Keith Cobby

Nov 13, 2012 at 18:06

This is a core holding for me. Who needs to buy an annuity when there are Trusts like these. Congratulations Job.

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Rob Walker

Nov 13, 2012 at 18:44

You don't need to be an expert to assess M&S, you need to be a Shopper! Try to buy size 12 shoes, queue up behind 9 people for the only kiosk open on a whole floor, assess the so-called qualityof the merchandise and the indifference of the sales staff and you will put your money elsewhere - Debenhams, Asos, House of Fraser....they all seem to have a plan, an enthusiasm and merchandise that compliments the brand. Apart from M&S food, thgis retail operation is drifting into oblivion, still clinging on to a reputation it no longer deserves.

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JohnW

Nov 13, 2012 at 19:20

I've held City of London IT for nearly 20 years and it's never disappointed me.

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miteor

Nov 14, 2012 at 20:41

Went to M&S to pick up 3 or 4 more of a favourite shirt. Endless stupid stock changes. What's the point, when there's a classic design ? Nothing remotely comparable, 6 months later. An item vaguely acceptable wasn't even on the shelf in my size. Double pathetic. You don't go there anymore with the expectation of finding anything on the shelf that you've tested and want to get more of, and fits. Massive waste of time, every time for 4 years. Drives you upmarket.

CTY is fab. Job take note.

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cc

Nov 16, 2012 at 23:55

I agree with Miteor.

Is it any wonder that M&S shares are not recovering? The store's offer is so variable. This year women's clothes look better but men's are dire. The homeware department has shrunk to almost nothing in our local branch, probably just as well when nobody is buying their dull offering. And why, when their food is so good and relatively profitable, do they not offer it online?

Yet they still spend a fortune on re-jigging their stores, juggling everything around on new and presumably expensive display stands, so that we cannot find what we are looking for.

I'm a long term shareholder and keep expecting things to get better, but I'm beginning to have my doubts.

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