Buxton eyes Tesco 'value opportunity' after contrarians move in

Old Mutual Global Investors' Richard Buxton is considering buying Tesco for the first time in four years, as managers investigate a contrarian opportunity in the stock despite the spectre of dividend cuts.

The share price of Britain's largest supermarket has tumbled 25% year to date, shedding 3.3% this month, as it struggles against increasing competition from low-cost rivals. The firm announced the departure of CEO Phil Clarke last month following another profit warning, and currently trades on a trailing PE of just 10 times earnings, with a dividend yield of almost 6%. However, the sustainability of that dividend has been called into question: some analysts predict a halving of Tesco's payout when it reports interim results on 1 October. Buxton, speaking this morning, said he is "n...