Warren Buffett: Tesco losses take millions off Berkshire Hathaway earnings

Financial report comes just weeks after Mr Buffett declared his stake in Tesco a ‘huge mistake’

Click to follow
The Independent Online

Warren Buffett, known as the Sage of Omaha for his innate investment intelligence, has recorded a $678mn (£427mn) loss on his Tesco investment in the space of three months.

The billionaire was Tesco’s fourth-largest investor until last month, when he sold off a large chunk of his stake in the retailer, taking his investment down from nearly four per cent to below three per cent.

Mr Buffett, who has called his investment in Tesco a “huge mistake”, saw net profits of his investment vehicle Berkshire Hathaway fall in the three months to 30 September to $4.6bn (£2.9bn), down from $5.1bn (£3.21bn) a year ago.

Tesco is under criminal investigation by the Serious Fraud Office following the retailer’s £263mn accounting scandal.

The supermarket has seen its shares more than halve in the past 12 months following a series of profit warnings, the discovery that the business had been running without a finance director for five months, and the firing of its chief executive Philip Clarke.

A week after Mr Buffett significantly reduced his shares in the retailer he saw $1bn (£160mn) wiped off the value of his stake in IBM, after the tech giant recorded a 17 per cent drop in its third quarter profits.

Just days later, Coca-Cola caused Mr Buffett’s investment losses to climb to $2bn (£1.26mn) after the soft-drinks giant’s shares plummeted six per cent following flat sales and a lowered guidance for the year.

Despite this, total third quarter revenues at Berkshire Hathaway rose from $46.5bn (£2.93bn) to $51.2bn (£32.3bn) however, propped up by its energy and railroad investments, among others.