Dillard’s stock jumps after Warren Buffett’s deputy reveals 6% stake in the struggling department-store chain

Warren Buffett and Ted Weschler take part in a Yahoo Finance interview

  • A vote of confidence from one of Warren Buffett’s lieutenants sent Dillard’s stock up as much as 19% in pre-market trading on Monday.
  • Ted Weschler, an investment manager at Buffett’s Berkshire Hathaway, revealed an almost 6% stake in the ailing department-store chain on Friday.
  • Weschler’s 1.08 million Dillard shares were worth about $45 million at the close of trading on Friday.
  • Dillard’s net sales tumbled 41% year-on-year in the six months to August 1, fueling a $171 million net loss.
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Dillard’s stock climbed as much as 19% in pre-market trading on Monday, after Warren Buffett’s deputy disclosed a nearly 6% stake in the ailing department-store chain.

Ted Weschler, who helps Buffett manage Berkshire Hathaway’s investment portfolio, along with Todd Combs, revealed the personal holding in a Securities and Exchange Commission filing released on Friday. Weschler’s 1.08 million Dillard’s shares were worth about $45 million on Friday, based on the retailer’s closing stock price.

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Dillard’s stock has dropped about 40% this year, reflecting the coronavirus pandemic’s devastating impact on physical retailers, as well as investors’ growing concerns about department stores in an increasingly online world. 

The company’s net sales dropped 41% year-on-year to $1.7 billion in the six months to August 1, swinging it to a $171 million net loss compared to $38 million in net income in the first half of 2019. Two of its peers, JCPenney and Neiman Marcus, have filed for bankruptcy this year.

Dillard’s was also relegated from the S&P 400 in June as the S&P Dow Jones Indices officials in charge of the index said it was “no longer representative of the midcap market space.”

Weschler joined Berkshire in 2012, after shelling out more than $5 million across two charity auctions in 2010 and 2011, earning him the right to privately dine with Buffett twice. He previously ran Peninsula Capital Advisors, a hedge fund in Virginia.

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The investment manager channeled Buffett in his recent Scripps deal. He agreed that Berkshire would stump up $600 million to help finance the broadcasting group’s takeover of ION Media, in exchange for preferred shares and stock warrants, emulating Buffett’s investments in Goldman Sachs and General Electric during the 2008 financial crisis.

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