Warren Buffett, the veteran US investor, has admitted that buying shares in Tesco was a "huge mistake".

Mr Buffett's Berkshire Hathaway starting buying shares in Tesco in 2006 and built a 5pc stake, making it his biggest investment outside of the US.

However, in an interview on CNBC, Mr Buffett said: "I made a mistake on Tesco. That was a huge mistake by me."

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The value of Berkshire's stake in Tesco has fallen by roughly $750m (NZ$952.4m) this year.

Mr Buffett is a famously long-term investor. He had previously hailed Tesco's dominance in the UK and its growth prospects outside its home market, particularly in developing economies in Asia.

However, Tesco has gradually unravelled in the last few years. It was forced to exit the US at a cost of £1.2bn (NZ$2.46b) as its new venture Fresh & Easy failed to make a profit, while sales in the UK began falling at a significant rate.

Last October, stock market filings revealed Berkshire had cut its holding in Tesco from 4.98 per cent to 3.98 per cent by offloading derivatives that represented 80m of the voting rights in the company.

Tesco is now facing one of the biggest challenges in its history after a whistleblower in the company's accounting team alerted new boss Dave Lewis to a £250m (NZ$512.6m) shortfall in the retailer's expected half-year profit.

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The shortfall was caused by Tesco booking income from deals with suppliers earlier than it should at the same time as pushing back costs.

Four executives have been suspended, including the UK chief executive Chris Bush. The company has hired Deloitte and its legal firm Freshfields to investigate the cause of the shortfall.

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Tesco is to be investigated by the Financial Conduct Authority over the £250m profit shortfall in its accounts.