By
Steve Muchoki
April 16th, 2024
Berkshire Hathaway has added Kroger to its long list of investment stakes. Warren Buffett’s company has purchased nearly 19 million shares of the retail giant. BRK.B is up.
Big business is almost always filled with investments and acquisitions. These investments are strategic by companies that believe the move will do wonders for their overall business. While the reason for the specific reasons might not always be known to the public, it is always interesting to see the choices. Another interesting investment has been carried out between Berkshire Hathaway and Kroger.
Though today the U.S stock markets are closed, on Friday after the news BRK.B was up. At close, the stock price was $226.80 (+0.15%). The after-hours price is $226.95,
Berkshire Hathaway Buys Stake in Kroger
Warren Buffett’s Berkshire Hathaway (BRK.B) company has made a huge move forward for 19 million shares in the American retail company, Kroger (KR). CNN reports that Berkshire Hathaway is now one of the 10 biggest owners of Kroger’s stock. Both Berkshire and Kroger shares jumped in response to the news, with Kroger jumping at least 6%. BRK.B is currently trading at $226.80 with KR at $28.23 since the close of markets on Friday, Feb. 14th. Markets remain closed today for the Presidents’ Day holiday.
Berkshire Hathaway and Kroger Business
Berkshire Hathaway now has about 18.94 million shares of Kroger. Purchased in the fourth quarter of last year, as revealed in a recent 13F filing. According to a report from The Motley Fool, Berkshire’s stake is 2.4%, worth $535 million.
Last year, Kroger’s stock performed lower than expected in the first two quarters. Generally, the company still went up about 5% in total for the whole year. There were also a few increases Kroger celebrated. For example, it recorded a 1.7% growth in same-store sales 2018’s fiscal third quarter. Compared to that, it was 2.5% in 2019’s fiscal first quarter.
The company also pays 2.2% in dividends and has plans for a share buyback program sometime in 2020’s fiscal year. Kroger intends to buy anywhere between $500 million and $1 billion worth of shares.
These things, however small, probably inspired the Berkshire move for a stake in the company.
Berkshire’s Future
Under Warren Buffett’s leadership, Berkshire Hathaway has become one of the world’s biggest companies with a market cap of about $555 billion. Since 1965, investing $1,000 in the S&P 500 will now yield about $175,000. A similar investment in Berkshire Hathaway would pull in a whopping $20 million. Because of Buffett’s amazing and profitable strategies, there’s some worry among a few of the company’s investors, surrounding the CEO’s departures.
Chairman and CEO Warren Buffett is 89 years old at the moment. As he would inevitably have to retire, these investors are concerned that the company’s amazing streak might be disrupted.
There is currently no official word confirming who will take over from Buffett. Regardless, the person will be saddled with the heavy responsibilities Buffet has carried on his shoulders for many years. Notwithstanding the fears, many believe that the company’s current books should leave no room for any doubt. Berkshire still has large stakes in Coca-Cola (KO), Kraft Heinz (KHC), Wells Fargo (WFC), Goldman Sachs (GS), General Motors (GM) and Mondelez, to name a few.
Buffett has also not said anything about leaving Berkshire Hathaway anytime soon. He is reportedly still fit enough to work, despite his age, and carries out his regular duties.
He is also one of the most valued CEOs in the U.S., without a commensurate pay. Buffet still takes an annual $100,000 salary and does not receive any stocks as remuneration.