Buffett ups stake in Tesco to over 5%

Warren Buffett’s Berkshire Hathaway has increased its stake in Tesco to 5.1% after buying on weakness last week.

The investor's position in the UK retailer has been increased from 3.21% to 5.08%, Tesco said today.

Buffett has held a position in Tesco since 2007 but began building his stake in earnest last year, reportedly. He told CNBC in November he would buy more were the company's share price, then at 394p, to fall in future.

Tesco shares fell 16% last Thursday after the retailer warned on profits and the outlook for the business, with its share price dropping to 325p.

By the next day, 13 January, Buffett had increased his stake above 5% for the first time, according to a regulatory filing.

Tesco shares reacted positively to the news, reversing earlier falls to stand 0.8% higher at 323p shortly after midday.

The supermarket giant said it would rein in out-of-town expansion plans following the profit warning, its first for 20 years, but promised to invest hundreds of millions of pounds in order to revamp the business.

Though a widely followed stock in the UK, some fund managers had been selling down their holdings in advance of the supermarket's results.

F&C UK Equity Income manager Phil Doel said the sales slowdown had been ‘well-flagged' but warned pressure on margins and the company's competitive positioning were the key issues for Tesco to address.