Don Reed Tesco PLC TESCO-LSE BUY Dec 10, 2008

High-quality company. British-based grocery retailer. Have about 25% of the UK market and have about 30% of their revenue outside of the UK. Multiples at 1^st blush look okay. EBITDA at 7.7 times is a little bit on the high side for grocery stores. Dividend looks attractive at 4.4%, but in the UK, you can buy the whole index that yields 4%. Not excited about grocery store sector. Slow growth, low margin industry that is being attacked from many different angles.

Sold his holdings about 2 years ago. Stumbled when they went into the US with their Fresh markets and this was followed by some management changes. Have been stumbling along since then but have had a bit of a recovery here. He prefers stocks with stable management. Dividend yield of about 4.25%, which is probably very safe.

One of the most global grocers in the world. Has a very big emerging-market exposure. Tried to get into the US but it didn’t work out and they are now pulling out. Came out with a fairly disappointing UK performance.

We are coming into some old technical resistance in the $22-$23 range from 2011. If a low is taken out you should sell it otherwise stick with it.

TSCDY-N is the ADR. They said they had a $215M overstatement in the books. With accounting stuff sometimes it ends up not just being one quarter so there could be more bad news to come. It is a great company and has a great franchise. They continue to have deflation in the food sector. He would wait until things settle down and you have a full understanding of what happened on the accounting side. The dividend may get cut. Wait for a couple of weeks to a month to see what happens.

UK based grocer. They had a change of CEO and are reviewing some revenues recently. It looks like the competitors in the UK will get worse.

The whole UK grocery sector has been under a lot of pressure. The problem is too much square footage growth from competitors. On his radar screen. It has a lot of work to do to pick itself back up.