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Alastair Mundy: it would be wrong not to invest in Tesco now
by Robert St George on Jun 05, 2014 at 14:14
Of the discounters, he summarised: ‘The own-label dishwasher tablets are fine. The own-label Shreddies are horrible.’
Mundy supposed Tesco could equally challenge the likes of Aldi and Lidl on price rather than conceding the value space. ‘They must be able to source food cheaper than them,’ he contended.
Mundy now owns Tesco in both his £1.2 billion Investec UK Special Situations fund, through which he has a £35 million stake in the supermarket, and the £906 million Temple Bar Investment Trust , in which Tesco has been his most-bought stock over the past three months.
He rejected fears that he had been buying into Tesco’s recovery too early: ‘I think it would be wrong not to have a position already.’
Mundy has backed Morrisons as well, despite its recent sales performance being ‘so outstandingly bad’ relative to its peers.
He speculated that Morrisons also faced imminent management change, given that its strategy had focused too much on rolling out extras like in-store bakeries rather than ‘getting enough Granny Smiths on the shelves’.
However, Mundy cautioned against viewing Morrisons as a property play, with value to be extracted by selling off its land.
For Mundy, the only viable alternative use of the property would be residential, which was unlikely to secure a substantial uplift in value.
‘The downside is significant if you think it is an asset play,’ he warned.
Mundy’s UK Special Situations fund has returned 38.4% over the past three years, and Temple Bar 49.3% on a net asset value basis, while the FTSE All Share index has generated 33% through the same period.
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by Dylan Lobo on Jul 28, 2014 at 15:00