Thursday, 25 September 2014

Supermarket sweep

Mike Ashley's multi-million pound punt on Tesco has certainly caused a stir in the London market this morning.

Ashley is a born trader and maverick entrepreneur and I would certainly be wary of betting against him. However, let's not forget that some of the sharpest "professional" investors in global stock markets have already this year taken substantial positions in listed British supermarkets and, so far, it doesn't appear (I say "appear" as these positions may have been hedged) to have been a good trade.

In case you don't recall, Elliot Management - the US hedge fund run by billionaire Paul Singer - reportedly built substantial positions in WM Morrison, Tesco and J Sainsbury in early January this year. Here is a link to a Financial Times article on the topic: http://www.ft.com/cms/s/0/2bd66b9c-7a28-11e3-a3e6-00144feabdc0.html#axzz3EKRcSdUu

Sandell Asset Management, which pushed for the break of transport company FirstGroup, swiftly followed Elliot by buying a stake in WM Morrison, according to Ben Martin, the stock market reporter at The Daily Telegraph.

Here is a link to Ben's piece:
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10581962/Morrisons-under-fire-as-activist-investor-revealed.html

However, since then WM Morrison, Tesco and J Sainsbury shares have all fallen by around 30pc!

No wonder, then, rumours of activism and takeovers involving these companies keep rattling around the market.  

1 comment:

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