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).