Store Capital, which focuses on single-tenant properties like restaurants, veterinary offices and fitness centers, revealed that Berkshire paid $377 million for a 9.8 percent stake in the company, the Wall Street Journal reported. However, Berkshire Hathaway's exposure to catastrophe losses, Buffett's succession and huge capital expenses on account of its railroad operations remain headwinds.
A press release said Store issued 18.6 million shares of its stock in a private transaction with a subsidiary of Berkshire at $20.25 per share.
Shares of Store rose more than $2, or 10 per cent, to $22.86 in early trading. Matt Levine, a Bloomberg columnist, put it best in a newsletter following Buffett's C$2 billion credit line to Home Capital last week.
A number of investment brokers have recently updated their price targets on shares of Berkshire Hathaway (NYSE:BRK-B).
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Buffett is a believer in the real estate space and in 2016 said there is no bubble, Business Insider noted. "Berkshire Hathaway's investment solidly positions Store for continued growth, while adding measurably to our already strong financial position". Berkshire "saw an opportunity to invest at an attractive price, and they believe in us". The result is that only 3% of the company's entire investment portfolio is within close proximity (a quarter mile in any direction) to ANY Sears (NASDAQ:SHLD), J.C. Penney (NYSE:JCP), Macy's (NYSE:M), Kmart or hhgregg (NYSE:HGG) store. Mr. Buffett responded within hours, he said, asking for more information.
The firm's biggest customers include a Midwestern furniture retailer, movie-theater chain AMC Entertainment Holdings Inc. and a chain of preschools.
About 10 days ago, Mr. Weschler called Store Capital to say that Berkshire wanted to make an investment, Mr. Volk said.
While the USA economy and stock markets have been growing since bottoming out in 2009, Buffett said it's the mega-rich who have been reaping the rewards, not the average worker. That makes Berkshire its third-largest investor.