Warren Buffett increases his stake in Tesco (unlike its UK chief)
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 20 January 2012
Warren Buffett, known as the Sage of Omaha for his investment prowess, spent almost £ 400m on Tesco shares within hours of the profit warning that battered its share price last week.
Mr Buffett, famed for taking a contrarian view on investments, has built his Berkshire Hathaway group's share of the company up to 5.08 per cent, buying an extra 1.87 per cent. He pounced last Thursday after Tesco issued its first warning on profits for more than 20 years, triggering a fall in the shares of nearly 20 per cent at one stage. The investment was revealed to the Stock Exchange yesterday.
Mr Buffett's move was in stark contrast to the controversial decision by Tesco's UK chief operating officer Noel "Bob" Robbins, who sold shares the week before the warning. That meant he made £44,000 more than he would have done had he waited until after the trading statement.
The famous investor said recently that he would buy more Tesco shares if the price fell, and has proved as good as his word, citing the supermarket as his preferred pick of European shares. He is now its third-biggest shareholder behind Legal & General and BlackRock.
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