<preform>The Investment Column: Keep the long-term faith in M&S</preform>

Even at Reed's current price, it's one to avoid; Hold on to TBI while it battles the turbulence
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The Independent Online

Marks & Spencer showed little compunction in rebuffing Philip Green's £9bn takeover advance.

Marks & Spencer showed little compunction in rebuffing Philip Green's £9bn takeover advance. But fear not if you felt the struggling retailer acted too hastily: a prickle of conscience prompted it to extend its returns policy to its shares.

It is to spend a whopping £2.3bn buying back 29 per cent of its share capital. Given the state of its stores, some might think the money would be better spent on a little refurb, but that would be quibbling.

Marks is returning the money via a tender offer to buy shares at between 332p and 380p - a complicated way of pretending to let shareholders choose what level they want out. In reality, deciding whether to sell shares via a tender offer is a bit like deciding whether to invest in that cashmere coat just before the sale starts.

Because you don't know the strike price - the level M&S will actually repurchase the shares - you run the risk of being too greedy, and getting nothing if you've opted for more than the strike price. Alternatively, if you are very keen to get rid of your share, and elect to go low, you could find yourself agreeing to sell your shares for less than you could have got on the open market. The eventual strike price will depend on what volume of shares is tendered at what level. You have until 11am on 20 October to decide; Marks will set the strike price six days later.

So, should you sell? It all depends on how much faith you have in Stuart Rose, the new chief executive, and his ability to improve the mess. M&S's latest sales figures are down nearly 8 per cent on a year ago. A trading update next Tuesday will reveal whether things are stabilising, but considering the enormity of Marks' woes, even Mr Rose is unlikely to make a difference until well into next year. Meanwhile the consumer environment is deteriorating.

Given that this column tipped M&S as its retail stock of the year, if you listened then, it might be wise to tender some of your holding at a lowish level to lock in some profit.

If you are a long-term investor, however, even the tender offer looks laughable and you are probably already nursing a loss. So hang on for Mr Rose's back to basics campaign to pay off. "Your M&S" still has something going for it after all - otherwise why would Mr Green have offered 400p a share? Better ranges will help, as will the refocus on its core, older customer base. Sexy it ain't, but given its heritage, M&S is definitely here to stay.

Even at Reed's current price, it's one to avoid

The National Health Service is getting better, and the profits of the private nursing agencies are looking sick.

In previous years, companies have made fat margins supplying expensive temps to understaffed hospitals. Now, the NHS has organised its own in-house banks of supply nurses, and is also doing national deals with the private sector to force down prices. At the same time, the NHS is requiring more checks of privately supplied nurses, which is driving temps back to the public sector. No wonder Reed Health, one of the UK's biggest nursing agencies, saw its profits slump by three-quarters to £1.4m for the financial year ending in June.

The big changes in the way the NHS organises staffing are now behind it, so things aren't going to stay as pressured for Reed. But the company has also botched the implementation of a new IT system, jacking up debts in the short term. And in the long term, the squeeze on the private sector will continue as the NHS hires more nurses, and spread to other areas of Reed's business, including local authority care. We said avoid at 80.5p in February; at 49.5p yesterday, avoid still.

Hold on to TBI while it battles the turbulence

TBI, the regional airports group, maintains a steady cruising speed.

The company, which owns Luton, Cardiff, Belfast and Skavsta in Sweden, says low-cost operators are continuing to drive growth in passenger numbers. In the six months to 30 September the likes of easyJet and Ryanair helped Luton and Belfast report a 13 per cent increase in passenger numbers compared with the same period last year, while Skavsta was up 21 per cent. Only Cardiff saw low-cost passenger numbers dwindle, down 10.6 per cent as bmibaby reduced capacity and services. One fillip was the announcement of a direct flight between Belfast and New York operated by Continental Airlines. However, while this long-haul addition will be welcome when it begins next May, TBI is very reliant on low-cost traffic. Total passenger numbers were up 8.9 per cent in the first half of this year at 8.5 million but 70 per cent of these were from the cheap-seat carriers.

This part of the airline sector has been battling against rising fuel prices and intense price competition, so is this a worry for TBI shareholders? Well, it is certainly not brilliant news and, as analysts pointed out yesterday, increased volumes at Luton will have no significant bottom-line impact for four years because of deeply discounted landing charges and the concession fees TBI pays to local councils.

Valued at a premium to BAA on a price earnings ratio, yesterday's closing price of 69p is about right. Hold.