I have just published a detailed research article on Tesco (TSCO), which examines in detail some of the financial issues facing the company. Its high levels of debt, which do not appear to be fully understood by the market, gives it limited financial flexibility. The article is available at Seeking Alpha.
Since 2009, Tesco (ticker: TSCO) has used special purpose vehicles (SPVs) to issue nearly £4bn of property bonds as part of its sale and leaseback programme. Despite Tesco being responsible for repayment of the bonds, they are not included on Tesco’s balance sheet, nor are they disclosed in the notes to its financial statements.
I first wrote about Aurora Investment Trust (ticker: ARR) in June last year; I had initiated a position in the expectation that the trust would soon be wound up, given the continuation vote due at the trust’s 2014 AGM (which will be held on 18 July). Such an outcome seemed to me almost inevitable, in view of the trust’s small size and poor performance, and the trust was trading at a substantial discount to its net asset value. I had expected the trust to go quietly; however, the outcome is not now as clear-cut as I had originally thought. While I still own a significant position in Aurora, in view of the increased uncertainty, I have reduced the size substantially.
The arguments for and against active and passive fund management continue unabated. Even Warren Buffett has come out in support of index funds in Berkshire Hathaway’s latest letter to shareholders. A recent article in the Financial Times, Active management industry in bafflingly good health, by newspaper’s Senior Investment Columnist, John Authers, discusses the potential impact of the growth in passive investing. The article makes some interesting points, but also illustrates a number of common misconceptions.
I have just published a research article on Wheelock & Co (ticker: 20 HK), which is available at Seeking Alpha.
I have just initiated a position in the Hong Kong holding company, Wheelock & Co (ticker: 20 HK). Its main asset is a 52% shareholding in Wharf Holdings (ticker: 4 HK). Wheelock’s shares are trading at a historically large discount to both net asset value and book value. I plan to publish research on Wheelock shortly.
I have just published an article on Seeking Alpha, Asian Luxury Hotels: Valuation and Benchmarking, that summarises some of the research I have recently done on Asian hotel companies, including Mandarin Oriental, Shangri-La Asia and Hongkong & Shanghai Hotels, which operates the Peninsula chain. It has provided no new investment ideas, but provides a useful read-across for Great Eagle Holdings, which is one of my largest positions.
I have just increased my position in Henderson Value Trust (ticker: HVTR) at a price of 240p per share. It is trading at a discount of around 17% to net asset value. HVTR now represents close to 5% of my portfolio.
My Discount Investing portfolio has performed well over the last six months, delivering a total return of around 8% (in pound sterling terms) since the end of August last year, compared with around 5% for the benchmark (FTSE All-World Total Return Index also in GBP).
For subscribers to my Discount Investing blog, I wanted to let you know that I have moved my blog to a new website: discount-investing.com.
You do not need to do anything: the subscription email addresses have been transferred and you should automatically receive notification of new posts.
I apologise for the limited number of posts in recent months. I hope to be posting on a more regular basis in future. Many thanks for your ongoing interest.