Monday 21 July 2014

News bites: Tesco CEO - Resignation and; Farnborough - Record Orders.

Tesco @ 291.3p, +6.6p (+2.21%), as at 10:10
Rolls-Royce @ 1034p, +2p (+0.19), as at 10:12
GE @ $26.46, -$0.15 (-0.46%), yesterday's close

Couple of pieces of significant news today: the first being the resignation of Philip Clarke as CEO at Tesco (Tesco boss Philip Clarke quits after profit warning), and the second being a steadying of confidence in the aerospace industry following a record breaking farnborough (FARNBOROUGH ROUND-UP - Record orders lift air show spirits). 

The first brings more concerns for me with my investment in the Supermarket sector and could introduce yet another lengthy period of ups and downs, and spending of the family silver, as the expectation for instant change and new ideas is firmly established, alongside a finite timescale of impatience and desperation, to arrest underperformance and the loss of market positive perception.
Whilst the shares have been boosted slightly by the news, my thinking has definitely swung towards exiting my supermarket investments with only the dividends currently meriting a hold until sentiment improves and the sector establishes a new basis of expectations.

As to Farnborough, well, having only recently topped up my largest holding in Rolls-Royce, that is better news and once again demonstrates the long term nature of the business. 

Long term order books and future sales allows investment in technology, and confidence in demand allows investment in production capacity and efficiency.

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