It's difficult to convey how big a deal Tesco's issues have been in the UK–it's had very extensive media coverage, a parliamentary inquiry looks likely, and there are investigations ongoing by the Serious Fraud Office and several regulatory bodies. This has created a distinct lack of goodwill in the general public.
Regardless of the accounting issues, they've had other issues too. There's the perception they're losing their customer base: they're ceding the low end of the market to certain supermarkets (Aldi, Lidl, Asda) and the higher end to others (Waitrose, Sainsbury's, M&S), leaving nothing in the middle. So that's a problem for them, and one they'd need effective management to handle.
All of this is potentially salvageable, but it is very uncertain, so I'm not surprised people might not want to invest.
The final thing to remember is that their stores look like shit. There's a tumbler about one near me being the worst Tescos on Earth, a truly frightening point. The way to play this investment is sell while they are about to spend loads of cash for a few years sorting out their stores and then just as this investment picks up you buy back in. Tescos still has lots of potential to be the default UK supermarket again.
There's a Tesco Express near me which is small but was okay until they redesigned it last year and did what I term a WHSmiths: put in shelves almost to the ceiling, thinned the aisles, packed in as much content as possible. It obviously allows more product but makes the shopping experience terrible when there are more than a few people in the store. I avoid it unless there's something on heavy discount that worth's picking up.
Yes, and a nasty derivatives position [0] if memory serves. Buffett also had to get involved after Solomon Brothers [1] had some regulatory improprieties.
