- Hedge fund Odey discloses `controversial' Tesco investment
- Says grocer stock `finally' reached an attractive entry point
Crispin Odey’s hedge fund firm has purchased shares in Tesco Plc, bolstering the perception that prospects are improving at the U.K.’s largest grocer.
“This may well be a controversial investment,” Odey Asset Management LLP’s Oliver Kelton, who manages the 1.3 billion-euro ($1.4 billion) European Focus Fund, said in a newsletter to investors this month. “However, we have been following the company closely now for well over a year and believe that we have finally reached an attractive entry point."
Tesco shares endured a miserable 2015, ending the year near their lowest level since 1997, as concerns mounted over Chief Executive Officer Dave Lewis’s turnaround plan. The company surprised investors last week by reporting its first quarterly sales growth in more than four years, a sign that it’s starting to wrestle back momentum from discounters Aldi and Lidl.
Tesco is the eighth-most shorted company in the U.K.’s benchmark FTSE 100 Index. Short interest, which is when investors loan out stock with the aim of repurchasing when the price has fallen, stands at 5.3 percent of its outstanding shares, according to data from researcher Markit. Odey declined to comment on the size of its Tesco investment.
Odey’s optimism on Tesco doesn’t extend across the industry. The hedge fund has a short position in J Sainsbury Plc that’s worth about 44.6 million pounds ($63.7 million) according to data compiled by Bloomberg.