Ewing, the only manager in the UK unit trust universe to hold the stock in his top ten, said the mistake made by many had been to treat the firm “as just another capital intenstive food retailer”.
Ocado’s share price shot up 20% to 164p on Thursday morning after the firm confirmed it was in talks with Morrison Supermarkets to share technology and operating knowledge which would help the latter launch an online grocery business.
Investors’ appetite for Ocado shares following the announcement meant they stood more than 47% up over one year, with their lowest price during that period (56.32p) hit on 12 November 2012.
Meanwhile, Morrison shares were up a more muted 2.45% at 278p in morning trading and were still down -8.16% over the 52-week period. No fund in the unit trust universe holds a high-conviction top-ten position in Morrison, according to FE Analytics.
In its preliminary results statement for the year to 3 February 2013, published on Thursday, Morrison announced its decision to enter the online grocery market and said “matters under discussion with Ocado may form part of the implementation of the strategy for entering that market”.
Its lack of online offering has been cited by some analysts as a cause for concern given the competitive nature of the supermarket sector.
Morrison announced a 4% decline in underlying pre-tax profit to £901m, which was ahead of market expectations of £887m. Like-for-like sales at the group were down 2.1% over the period.
The supermarket was quick to assure shareholders that a move into the online space did not depend on reaching a deal with Ocado. On its part Ocado said negotiations did not involve any discussion of Morrison acquiring either the whole of or an equity stake in its business, and would be complementary to its existing partnership with Waitrose.
Years of investment
Ewing said the proposed deal with Morrison was the first public acknowledgement by a competitor that Ocado’s knowhow has value and years of investment and trial by error has perhaps not been in vain.
“For grocers with little or no online presence in the UK and around the world it may make more sense to leverage Ocado’s technology rather than spend years developing an expensive bespoke solution.
“Alongside this exciting development, the underlying business at Ocado continues to perform well. The launch of a second delivery centre is progressing as planned and growth of 14.4% is ahead of consensus,” he added.
At 2.7% of his UK Growth Fund, Ocado is Ewing’s eighth-biggest holding.