A few weeks ago, I sold my Unilever (LSE: ULVR) shares. I made a tiny profit — and picked up a few dividends along the way — but I felt there were better long-term prospects in the market.
I was becoming increasingly frustrated with the apparent lack of share price growth, and didn’t see much changing over the next year or so.
Share price performance
The Unilever share price hasn’t moved since the start of 2022, and is back to where it was in 2017.
In 2021, both revenue and operating profit were lower than they were four years earlier. The UK’s third-largest listed company appeared to be stuck in the doldrums.
Nelson Peltz
Although I welcomed the appointment to the board of Nelson Peltz, the billionaire activist investor, I felt it would be a long time before his impact became visible.
As a director of Procter & Gamble, Peltz is credited with introducing several structural changes which, during his four-year tenure, saw the share price increase by more than 40%.
Peltz believes Unilever has become a “suffocating bureaucracy“.
However, Unilever generates most of its income from well known brands (such as Marmite, Lynx and Dove) and in these cost-conscious times, I felt consumers would shun these for less expensive labels.
The Chief Executive of Tesco, Ken Murphy, recently observed that shoppers were “watching every penny to make ends meet“.
Shareholder returns
I also felt that the company’s dividend policy was a little mean, with its yield being slightly below that of the FTSE 100 average. Unilever is part way through a €3bn share buyback programme, but I prefer cash in my hand.
I therefore decided to sell. But then, along came Kwasi Kwarteng, and the now infamous mini-budget.
The result was a week of turmoil in the financial markets, with the pound crashing to an all-time low against the dollar, and the FTSE 100 falling by nearly 4%.
However, amid all the doom and gloom, Unilever’s share price went up by 1.3%.
Regrets
That’s why I have seller’s remorse.
The way in which the share price bucked the market, reminded me of its great defensive properties.
Unilever generates a significant proportion of its revenue in dollars — more than half of its sales come from outside Europe — but reports its results in euros. This means the company benefits from a strong dollar.
For the same reason, as a UK investor, I can be protected against a weaker pound.
In addition, the consumer giant with a £100bn market cap, generates nearly 60% of its sales in emerging markets, where growth is likely to be faster than in more established territories.
And although Unilever’s products might be more expensive that those of some of its rivals, shoppers do have a loyalty to their favourite brands, even when cash is tight.
A lesson learned
So, what has this experience taught me about investing? Think, think, and think again.
The proceeds from selling my shares have gone on something else, so I’m unable to invest once more. As the old saying goes, act in haste, repent at leisure.
