Friday, January 13, 2012

Tesco: Analysts asleep at the wheel

tesco © fintag

News comments:
Tesco used to be a dull ranging stock that never did much. The company was well run, always hit its targets and was on the way to becoming the next Walmart. It has been the stalwart of pension funds for years and as safe as houses.

Nearly all the equity analysts had Tesco as a buy. And why not? No need to do much research like visiting a Tesco express to see how souless and expensive the supermarket is. And why do they never stock the produce the locals need? Go to the one on Kings Street in Hammersmith. A nice middle class area and it sells the stuff used to make Subway food.

And then Tesco told the markets it got Christmas wrong (so proving my luxury is the new black blog post spot on) and the stock tanked. It is human after all.

All Investment Banks have analysts. They are an overhead and yet still get bonuses for failure. No wonder the Investment Banks are starting to sell everything off because capitalism works that way (with the helping hand of redtapelators). I have never come across a stock picker who was any good. If you are a good analyst then you should be a trader.

The UK has one of the most competitive supermarket sectors in the world and seeing Tesco fall is a great thing. We don't recommend stocks on fintag because we are not allowed to but if we did then Tesco would be a good buy. Of course you can pay for an overpaid analyst to tell you the same thing but alas they are usually wrong.

Do as Goldman Sachs do. If they say jump, run away. That is how they make money. Well sort of.

The COO of Tesco made a cool profit by selling before the announcement (inside trading or what?). He didn't need to look at any analyst report to know he saw an opportunity to make a quick buck.

I am not a great fan of senior people holding stock precisely for these reasons. Senior management should not be allowed to trade the stock for the company they work for.

Today's shorts:
Analysts are the new credit rating agencies (slow) (telegraph)

Today's longs:
The brown and orange come up the rear (yorkshirepost)

Burberry 1 Asda 0.