Warren Buffett's Berkshire Hathaway slashes Tesco stake by £300m

Legendary investor Warren Buffett’s Berkshire Hathaway has reduced its stake in Tesco by £300m.

Berkshire Hathaway slashed its stake from 4.9% to 3.98% by offloading derivatives.

Stock market filings showed that the company conducted the deal on 16 October, the same day Berkshire Hathaway bought Birmingham-based engineering group IMI’s drinks-dispensing business for £690m.

The news comes after Tesco reported a drop in like-for-like sales across its 10 international businesses, including the UK. Half-year pre-tax profits for the retailer fell by 24% to £1.39bn.

After a meeting with Tesco CEO Philip Clarke and CFO Laurie McIlwee, Barclays analysts sent a note to clients saying the retailer was trying to turn around the company.

James Anstead at Barclays said: “It is abundantly clear that the CEO and CFO are both taking a very active approach, trying to rectify some of the mistakes and missed opportunities that have hurt the UK performance over recent years.

“Their initiatives suggest that there are good reasons to be optimistic about the resilience of UK sales and profits, although the debate on the hard discounters is unlikely to dissipate any time soon.

“The reality is that there is no easy answer for any of the mainstream retailers – but differentiation must be a big piece of the answer and Tesco is working hard to create much clearer reasons for shoppers to choose its stores.

“The CEO would estimate that the UK business is around a third of the way through its recovery process, with product quality being the area which has seen most improvement to date. Two years ago, staff at Tesco UK ‘could see a mountain range to climb, now it is a few hills’. Staff engagement levels are far better today.”