Private Investor: Every little helps but bigger is better

When it comes to Tesco, it would seem, for many people, it is far too big already. With 30 per cent of the groceries market, profits of over £2bn and a finger in every pie from pet insurance to broadband, Tesco is just too, well, big - too intrusive, too powerful. There is to be yet another Competition Commission inquiry into the supermarkets sector, and hardly a week goes by without another whinge about Tesco's vast corporate influence.

Most of Tesco's success has been to the benefit of its customers rather than its shareholders. No one makes the great British public do their shopping there, you know. They go because of its blend of value, quality and, above all, convenience. Indeed, the proof that Tesco doesn't have some divine right to an ever-increasing share of our spending is evidenced in last week's figures, which revealed a less than sparkling overall increase in sales. Thus the shares slipped.

The shares also fell, I suspect, because the market pretty quickly worked out that the supposed new emphasis on Tesco serving its shareholders as well as it treats its customers may not be much more than marketing flannel - two for the price of one you might say. The funds from the sale and leaseback of Tesco's huge property portfolio, for example, will be directed towards the company's equally formidable programme of capital expenditure here and abroad. The share buyback is also relatively modest for a firm of this size. The dividend increase of 14 per cent, meanwhile, is a genuine improvement, but follows a few years of much lower growth. Still, every little helps.

But even if the Competition Commission and Tesco's rivals together manage to stymie its progress in the groceries market, it can still make much more ground in non-food items - everything from books to homewares (and pet insurance and broadband, of course). Plus there's the international expansion of Tesco in places as diverse as Hungary and Thailand, with an increasingly cautious exposure to the United States. That, it would seem to me, will keep chief executive Sir Terry Leahy as busy as the anti-Tesco lobby. I'm happy to buy more shares in Tesco, then, and have done so, adding a few more at 321p. Investors are said to be only interested in a quick buck, but I'm happy to be patient and back a business that is happy to invest in itself.

Having said that, however, I'm quite interested in making another short-term gain, courtesy of a foreign company taking over one of our national institutions. In case you hadn't noticed, the Government has signalled that it might not have such a problem with Gazprom taking over Centrica, which owns the British Gas retail operation.

I can remember a time when there was such a thing as a national energy policy and the Government would give a guiding hand to the nationalised industries to ensure that British natural gas was a "premium fuel", far too precious just to be burned up making electricity and directed instead directly to industrial applications and domestic heating. Coal, not much good for anything else, and plenty of it, was to be devoted to powering the lights.

The idea of the Russians owning our gas supply was unthinkable. Then again, so was the notion of French and Germans owning bits of the electricity and water industries, let alone the Spanish running our banks. Nothing, it would seem, is sacred these days, even when there is no reciprocity from other countries. A lot of people, who got windfall shares from privatisations and demutualisations, will make a few quid from all this foreign M&A activity, but I wonder whether as a nation we'd be better off looking to the long term, Tesco-style.

Another long-term investor is Jim Cramer. Little known here, he is a huge influence in the States, where he has his own TV shows, website and the rest. A news item in The Independent mentioned him as one of the assets of TheStreet.com. That was one of the great dot.com boom stocks that crashed and fell - but survived. Only trouble is I can't find a broker who'll buy the shares for me.

s.ogrady@independent.co.uk

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