Are Tesco Plc a BUY?

This is an educational video showing you how I trade, the strategies I use and the money management techniques I use to good effect. This video does not constitute investment advice!! Please contact your finance advisor before making any investment decisions.

All comments welcome...


Derby Gripe:
http://www.derbygripe.co.uk/fprice.htm

Telegraph:
http://www.telegraph.co.uk/finance/personalfinance/investing/7955733/10-ways-...


http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/7919406/Food-inflati...

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[Westhamsterdam]

On Tesco Bank. You have house hold debt ratios at 180% of income in the UK just how much debt can you put on them? In order to become a national bank it's likely to need at least 10% core 1 capital ratio. This money needs to be raised but it's non working capital interest of say 5% needs to be paid? Becoming a national bank doesn't come cheap!

What are Tesco's real debts? The profits look inflated by freehold/lease buy back. Notice another £0.6bn to tie in with the end of year!

[ElliottInvestments]

Thank you for your insightful comments. I am indeed a technical trader that underpins my analysis with fundamental research.

With regard to the Banking arm of Tesco’s, sure there are many complications, but I intend to hold for one year max, and we are still in a period of inflation- therefore I see no problems in the short term (a rights issue is unlikely).

[Westhamsterdam]

I'm not sure whether you're a chartist or fundamentalist. The crux of the problem is that this is a trade crisis, China can't keep these vast tradingsurpluses up for ever by devaluing it's currency. When the Yuan appreciates you get massive inflationary pressures & China losses its compatative advantage.

Tesco is not soley a food retailer thus it could suffer should household consumer income fall dramatically. How much money core 1 does Tesco need to be a bank? rights issue?

[ElliottInvestments]

‘Tesco could suffer should household consumer income fall dramatically’,

Of course, as discussed, I agree, it will to some extent.

‘When the Yuan appreciates you get massive inflationary pressures & China losses its compatative advantage.’

Can you elaborate on this point? Surely when the Yuan losses value, they get inflation, this is competitive devaluation! Hence, well done China....

Kind regards,

[Westhamsterdam]

What happens if you use like/like with Wal Mart accounting techniques with Tesco? Xmas like/like would be down 5%. You take Tesco accounts with no questions asked

Of course you're going to get incredible growth in Asia if you're opening up at incredible rates. What happens if Asia crashes? Tesco would be in deep trouble.

No mention of Tesco market volumes, incredible when talking about support lines. The volumes have been generally low.

[ElliottInvestments]

Hello,

I agree the accounting techniques used could potentially be a threat to the share price.

What happens if Asia crashes? – I do not believe this is even remotely likely.

Volumes- I use volume analysis with a pinch of salt and when looking at Tesco’s volume I see no real indications of capitulation or low volume. Slightly higher volume, not lower, is to be expected as sp becomes more volatile.

Thanks for your comments, always appreciated!

Kind Regards,

Elliott

[Westhamsterdam]

I'm back again after a few days off. Can I just ask you how much does TSCO need to raise in Core 1 to be a national bank? I asked you this before but you appeared to skip. There are big barriers to being a national bank. Does Tesco need to go onto the fin mrkts to raise vast sums?

You mention inflaton but isn't this a traditional negative for equity markets. China imports the vast majority importer of commodities thus as soon as the currency appreciates you raw costs greatly increase.

[ElliottInvestments]

Thank you for your kind comments, as discussed, these videos are for educational purposes, all the best with your investments.

Kind Regards,

Elliott

[Zocchi13]

very interesting points you raise. Im a huge fan of your videos and really take your points on board when deciding to invest.