Dillard’s stock soars 42% after Warren Buffett’s deputy reveals 6% stake

Warren Buffet Ted Weschler
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 42% 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 shares soared in value to about $64 million on Monday.
  • 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 surged as much as 42% 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 jumped in value to about $62 million on Monday.

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Dillard’s stock had 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. 

Its Monday rally added more than $390 million to the retailer’s market capitalization, boosting it to north of $1.3 billion.

The company’s net sales tumbled 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.