tHE turmoil at Tesco has triggered a fresh sale of shares by investor Warren Buffett after he labelled his investment in the chain a “huge mistake”.
The billionaire’s Berkshire Hathaway investment firm has reduced its position in Tesco to below three per cent, having previously held a stake of around five per cent. It was down to 3.2 per cent earlier this week before the latest regulatory disclosure.
In a recent interview, Mr Buffett told CNBC: “I made a mistake on Tesco. That was a huge mistake by me.”
Tesco’s shares have slumped 50 per cent since February after a series of profit warnings and last month’s revelation that it had overstated its profits estimate to the City by as much as £250m.
Eight senior executives have been suspended so an inquiry into the error can take place.
Tesco is currently worth around £13.9bn, valuing a three per cent holding at £419m. The darling of the retail sector during two decades of uninterrupted earnings growth, Tesco has suffered in recent years from failed attempts to break into the United States and Japan.
Berkshire Hathaway began building its stake in Tesco in 2006. Mr Buffett, 84, is the world’s third-richest person and is often referred to as the Sage of Omaha. He oversees a conglomerate with more than 80 businesses, and more than $119bn of stocks. Mr Buffett writes an annual letter to shareholders in Berkshire Hathaway, which is studied in detail by analysts.
“When we own portions of outstanding businesses with outstanding managements, our favourite holding period is forever, ” he once wrote.
Earlier this week, it was revealed that Leeds-based supermarket chain Asda, one of Tesco’s biggest rivals, had seen its sales and profits rise in 2013.
The company, which has around 10,000 staff in Yorkshire, said many of its customers faced low wage growth and rising energy bills in 2013.
Recent data has shown that Asda was the only one of the big four grocers to increase sales and market share in the three months to the end of September.
Data from Kantar Worldpanel showed that Asda reported the best results among the big four supermarkets.