Warren Buffett remains Kroger’s third largest investor
Soaring inflation, interest rates and volatility are sinking stocks, but legendary investor Warren Buffett remains Kroger’s third-largest shareholder with more than $3 billion in stock.
Hailed as the “Oracle of Omaha”, Buffett is considered one of the most successful investors of all time. A proponent of “value investing,” which prioritizes a company’s finances over hype, Buffett ignores market volatility and touts quality, well-run businesses that remain profitable.
Value investing becomes very fashionable in tough times as investors exit riskier companies and even buy “safety stocks” like Kroger (or Procter & Gamble) which grow more slowly but tend to continue to advance.
“It’s only when the tide goes out that you find out who’s been swimming naked,” Buffett said of the tough times to test stock performance.
“Buy less, make things longer”:Shoppers and Kroger fight food inflation
The country’s largest supermarket chain, Kroger stock fell out of favor on Wall Street in mid-2017 when tech juggernaut Amazon suddenly became a direct competitor by acquiring Whole Foods.
Since then, the downtown-based retailer has aggressively ramped up its online capabilities. First, it quickly expanded curbside or parking lot pickup for customers who ordered online, then began to expand door-to-door delivery.
Kroger has pledged to double its digital grocery business to $20 billion in sales by the end of 2023.
So far in 2022, there has been a lot of market turbulence: the overall market has narrowly flirted with bear market territory (an overall decline of 20% from previous highs). But so far this year, Kroger shares are still up double digits.
A Buffett investment is a tacit endorsement of a company that may also entice other investors to buy stock. With an estimated net worth of $118 billion, Forbes ranks the 91-year-old as the world’s fifth richest on its 2022 World’s Billionaires list.
Kroger’s stock surged the day it was first revealed in early 2020 that Buffett had bought a $500 million stake in the country’s largest supermarket chain for the first time. The shares have doubled since he bought – although the stock is off its all-time high of April 8 at $62.78.
Buffett’s Omaha-based Berkshire Hathaway conglomerate tripled its stake in Kroger between late 2019 and mid-2021. The company reduced its holdings by 5.6% in the first quarter of 2022 amid the stock’s record high.
In addition to Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano’s, Fry’s, Smith’s, King Soopers, QFC and others. The company has nearly 2,800 stores and employs 420,000 people.
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