Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Tesco needs new leadership, says Alastair Mundy

Despite a 19% drop in Tesco’s (TSCO.L) share price so far this year, Alastair Mundy, manager of the Temple Bar investment trust, says it would take a big change, like a management shake-up for him to become interested in the stock.

Mundy is a contrarian investor and looks for out-of-favour stocks, which have typically fallen 50% from their peak over the past seven years. Tesco, which reports half-year results tomorrow, may be down on its luck but Mundy says he won’t be buying its shares in the foreseeable future.

He adds that the company isn’t as strong as other retailers and doesn’t generate much cash due to its high capital expenditure on opening new stores abroad.

Mundy also believes the business will need new leadership to solve the its problems rather than relying on existing management.

An ideal environment for contrarian investors?

Despite difficult market conditions Mundy says he’s not finding more opportunities as a contrarian investor and believes there is a lack of quality stocks as listing rules in the UK have become too lax.

He adds that since buying JJB Sports, which he calls one of his ‘worst investment’ decisions, he’s avoiding smaller companies in the portfolio as they can be difficult to get enough information on and can be reliant on key people within management to drive the company forward.

Mundy, who features in Citywire Selection, our choice of the best investment funds, manages a large number of other funds such as the Investec High Income investment trust and Investec Cautious Managed and UK Special Situations funds. He believes his ten-strong team is big enough to cope.

Temple Bar currently trades at 994p, a 2.4% premium, to its net asset value (NAV) of 970p. Its shareholders have enjoyed a total return of 19% over the past year and 59% over the past five years, beating the FTSE All-Share total returns of 12% on a one and five year basis.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Play Wealth managers reveal the best investment ideas of the year

Wealth managers reveal the best investment ideas of the year

From robotics to impact investing, wealth managers share the best ideas they have heard this year.

Read More
Wealth Manager on Twitter