Tags: Berkshire Hathaway | Tesco | investment | accounting

CNBC: Berkshire Hathaway Loses $716 Million on Tesco Investment

By    |   Thursday, 25 September 2014 10:38 AM

Shares of Tesco, Britain's biggest grocer, have dropped 16 percent in the past two weeks, hitting a 12-year low, amid an accounting scandal at the company.

That's not good news for Warren Buffett's Berkshire Hathaway, which owned more than 300 million Tesco shares as of Dec. 31.

Assuming the size of that stake, which dates back to 2007, is unchanged, Berkshire has lost $716 million on its position, according to CNBC.

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On Monday, Tesco announced a $407 million overstatement of its profit forecast for the first half of the year. It suspended four senior executives and brought in outside auditors and lawyers to investigate.

On Wednesday, ratings agency Standard & Poor's put Tesco on negative credit watch.

Discussing the company's last seven years, Berkshire Hathaway Vice Chairman Charlie Munger recently said, "Tesco owned the world, [and] one day, it stopped working so well," according to Bloomberg.

"The natural course of competition is that it gets tough," Munger added.

"It really stood out in the corporate landscape as a fast, dynamic, innovative and market-leading company," Robert Gregory, global research director at Planet Retail in London, told the news service.

But things have changed, and some experts view the company's woes as a death knell of sorts.

"Tesco is no longer a viable investment," Marc Kimsey, a senior trader at Accendo Markets, told The Wall Street Journal.

To be sure, billionaire Mike Ashley's Sports Direct International has put $70 million into Tesco stock, betting on a rebound, CNBC reported.

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Shares of Tesco, Britain's biggest grocer, have dropped 16 percent in the past two weeks, hitting a 12-year low, amid an accounting scandal at the company.
Berkshire Hathaway, Tesco, investment, accounting
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2014-38-25
Thursday, 25 September 2014 10:38 AM
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