One of Warren Buffetts famous investing sayings is be fearful when others are greedy and greedy only when others are fearful or, in other words, sell when others are buying and buy when theyre selling.
But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.
So, in this series of articles, were going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.
Huge mistake
Quoting Warren Buffet in connection withTesco (LSE: TSCO) might be considered a bit dubiousthese days. After buying heavily into the supermarket giant in 2012, following its first profit warning (and when its share price plunged 16%), the Sage of Omaha recently admitted that hed made a huge mistake with Tesco.
Andhuge is the right word. Over the course of the past year the value of Mr Buffetts stake in Tesco has shrunk by more than560m (over $900m), as the supermarkets share price has almost halved.
The most recent drop was caused by Tescos admission on 22 September that it had overstated its half-year profit guidance by 250m.
In the wake of the admissionfive senior managers, including UK managing director Chris Bush and commercial director Kevin Grace,have now been suspended, andthe Financial Conduct Authority (FCA) has initiated a full-scale investigation into what happened.
Reasons to be fearful
Theres no doubt that a lot of investors are now fearful about Tescos prospects as an investment. And there areplenty enough reasons to be fearful. The company has really lost its way over the past few years revenues and market share have been falling in the face of stiff competition, both from discounters Aldi and Lidl and premium retailer Waitrose, and the company was forced to savagely slash its precious dividend to fund a war chest.
Having a new CEO in place is definitelya good thing, but it will take time for Dave Lewis to make any real impact. And itll also take time for Lewiss new board appointees Alan Stewart, headhunted from Marks & Spencer to be Tescosnew finance director, plusMikael Ohlsson, ex-CEOof Ikea, and Richard Cousins, former head of catering giantCompass, who are being brought in as non-executive directors from the start of November to get to grips with the mammoth turnaround task that faces them.
So, once the reliefat having some new blood in the boardroom has worn off, the share price might drop yet further to reflect the uncertainty of the outcome.
Maybe this time
But if Buffets oft-quoted mantra about fearand greedis correct, with the market so fearful, roundabout now may be the right time to buy. And thats exactly what a lot of customers of the Motley Fools ShareDealing service have been doing. They put Tesco firmlyin the number 1 spot in the latest Top Ten Buys list*, with three times as many people buying Tesco as bought the second-placed company (although whether Warren Buffet will follow his own advice, and average down, remains to be seen).
Maybe this time the buyers will win. New CEO Dave Lewis (and anyone he brings to the boardroom table)has the huge advantage of simply not having been there when everything went wrong something the market should react to positively so long as he delivers, of course.
Under pressure
And justhaving a finance director should provide some very-much-needed reassurance for investors, following the revelation that no-one had actually been doing the job for almost six months, sinceLaurie McIlwees resignation on 4 April.
There might also be a new chairman, too, withSir Richard Broadbent coming under pressure to follow Philip Clarke in departing from the company.
Having new people in key positions is only the start, of course, but its a good start.
Or maybe itll be dj vu all over again. Tesco has been at or near the top of theSharedealing services Top Ten Buys list on numerous occasions over the past few months, no doubtprompted each time by the belief that things surely couldnt get any worse. Yet things didexactlythateach and every time.
Maybe this time will be different. But whatever anyone else has been doing, only you can make the decision to buy.
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Jon Wallis owns shares of Tesco. The Motley Fool UK owns shares of Tesco. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
*based on aggregate data from The Motley Fool ShareDealing Service.
*based on aggregate data from The Motley Fool ShareDealing Service.
*based on aggregate data from The Motley Fool ShareDealing Service.