Berkshire Hathaway will invest $377 million into Store Capital, making it the third biggest shareholder in the company behind Vanguard Group and Fidelity Management & Research, according to data from Factset.
Store Capital describes itself as a leader in the single tenant operational real estate and dedicates itself to net-lease profit-center property investments. And prior to today's surge, the stock had fallen 25% over the past year, including a drop of more than 13% since reporting disappointing first-quarter earnings in May.
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.
Christopher Volk, Store's chief executive, in an interview said the Berkshire investment was three years in the making, beginning with his 2014 email to Buffett, when the REIT was still private, to gauge his interest.
Early trading in Store shares on the New York Stock Exchange pushed the price up 9.8 percent to $22.21 per share. 14 shares were traded on Berkshire Hathaway's last session. Berkshire "saw an opportunity to invest at an attractive price, and they believe in us". Mr. Buffett responded within hours, he said, asking for more information.
Store's portfolio includes more than 1,750 properties in 48 US states, including such customers as AMC Entertainment and the second-largest Applebee's restaurant franchisee. The stock's market capitalization is 274.91M. Camping World Holdings Inc., also a Store Capital customer, won a bankruptcy auction for some of Gander Mountain's assets.
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.