Store Capital And Buffett's Big Bet On Real Estate

Warren Buffett

The deal consisted of a private placement of 18.6 million shares at $20.25 a piece to a subsidiary of Berkshire, National Indemnity Co.

Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) eyed real estate investment trust Store Capital (NYSE: STOR) for three years before investing in the company. So, most stocks that are involved with brick-and-mortar retail have fallen as well, and REITs that own retail real estate have not been spared.

Store Capital (STOR) was downgraded to "neutral" from "outperform" with a new price target of $24 from $23 at Mizuho Tuesday.

One possible reason is that Berkshire is betting that not all retail is in trouble - specifically service-based businesses that have little to worry about in terms of e-commerce headwinds.

The share price of Berkshire Hathaway (NYSE:BRK-B) was down -0.65% during the last day of trading, with a day high of 169.27.

Store Capital shares slid this past spring after the company reported disappointing earnings. They were prepared to take advantage of an attractive buying opportunity in the market and they did so.

The announcement sent shares of Store Capital higher by more than 10 percent on Monday.

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Mr. Buffett didn't immediately respond to a request for comment.

"We will be the economic leader", Buffett said in the interview.

About 10 days ago, Mr. Weschler called Store Capital to say that Berkshire wanted to make an investment, Mr. Volk said.

The firm's biggest customers include a Midwestern furniture retailer, movie-theater chain AMC Entertainment Holdings Inc. and a chain of preschools.

"The stock market has been going up basically since March of 2009", Buffett said.

That's the view of billionaire investor Warren Buffett, when asked whether Donald Trump deserves credit for surging stock prices after he was elected president in November. That makes Berkshire its third-largest investor.

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