Warren Buffett Dumping Tesco PLC (TSCO) Won’t Make Things Easier for the Stock

Investors make mistakes sometimes. Even the greatest ones, such as Warren Buffett. Recently, the Oracle of Omaha has lost around $750 million from his bet on Tesco PLC (LON:TSCO). However, with the stock declining by over 47% since the beginning of the year, the CEO of Berkshire Hathaway Inc. (NYSE:BRK.B) decided to cut his losses and cut down his position in the food retail stores operator to below 3% from 3.7% held previously. Even though the filing has not specified how many shares exactly Berkshire owns at the moment, it’s easy to assume that the investor sold a very large portion of his stake, which previously contained some 245.3 million shares.

Mr. Buffett also admits that he made a mistake by investing in Tesco PLC (LON:TSCO). During his appearance on CNBC‘s “Squawk Box” at the beginning of October, Mr. Buffett said: “That was a huge mistake by me, but I am going to make mistakes, but I am not going to make mistakes because I buy businesses I like […] I am just going to be wrong sometimes about the facts.”

The investment in Tesco PLC (LON:TSCO) costed Berkshire around $1.7 billion, according to the holding company’s letter to shareholders for 2013, the position containing 301 million shares as of the end of the year. The company was also included in the list of 15 companies in which Berkshire Hathaway Inc. (NYSE:BRK.B) owns the most expensive holdings. As we pointed out in an earlier article, Tesco was the only position that had a lower market value at the end of 2013 than the purchase price. Nevertheless, for a huge company like Berkshire, losing $750 million is not such a big deal, especially with other companies performing splendidly. In any case, there is definitely more room for Mr. Buffett to “make mistakes”

As you already know, Tesco PLC (LON:TSCO) has been struggling over the last months with its financial situation, a major hit coming in September after the company discovered some issues with its guidance, which was overstated by some $400 million. The mistake is currently under investigation by the Financial Conduct Authority as well as is examined by independent auditors.

Disclosure: none