Buffett ups stake in Tesco by £120m

Billionaire investor Warren Buffett has boosted exposure to Tesco with the purchase of £120m ($185.5m) shares in the retailer, taking his total stake to 3.64%.

Berkshire Hathaway, Buffett's investment company, has bought 34 million shares in the world's third biggest retailer, according to Reuters.

It is thought the move reflects a vote of confidence in Tesco's new chief executive Philip Clarke, who has said he wants to significantly reduce the firm's losses this financial year and break even towards the end of 2013.

The firm is preparing to report on its first half-year results under the CEO next week.

Buffett first appeared on Tesco's share register in May 2006, taking a 1% stake, which he has been increasing gradually ever since, Reuters reports.

Earlier this year the investor criticised Tesco's Fresh & Easy chain in the United States, saying it should "look hard" to reduce costs.

Buffett's backing lifted Tesco's share price, with the stock closing 1.7% or 6.2p up, at 371p.

Meanwhile, Berkshire Hathaway is set to launch its first share buyback programme, with plans to purchase shares in the open market or through privately negotiated transactions, the BBC reports.

Berkshire said it would pay a maximum of a 10% premium on the current book value of the shares.

The move comes after repeated complaints from investors that the company's stock is undervalued.

"If we are correct in our opinion, repurchases will enhance the per-share intrinsic value of Berkshire shares, benefitting shareholders who retain their interest," the company said in a statement.

The company added it will use "cash on hand" to fund the repurchases, but would not allow its cash reserves to fall below $20bn.

Berkshire had almost $50bn of cash reserves as of 30 June, but has used almost $15bn on acquiring new business or making investments, including a $5bn stake in Bank of America.