The Oracle of Omaha bets on Cincinnati: Warren Buffett becomes No. 3 holder in Kroger

Kroger’s new home delivery: Watch how it worksKroger announced the first of 20 customer fulfillment centers planned nationwide will begin delivering groceries from Monroe, offering shoppers what it promises will be an improved, more reliable service.Provided, Cincinnati EnquirerKroger appears to have a new superfan: legendary investor Warren Buffett, who has become the grocer’s third-largest shareholder.Hailed as the “Oracle of Omaha,” Buffett is widely considered one of the most successful U.S. investors.An investment by Buffett is a tacit endorsement of a company that can prompt other investors to buy shares too. Kroger’s stock jumped the day it was first disclosed Buffett had first bought a then-$500 million stake in the nation’s largest supermarket chain.   Forbes lists the 90-year-old as the world’s sixth-wealthiest on its 2021 World’s Billionaires list.Buffett likes the Cincinnati-based company so much, his investment company Berkshire Hathaway bought another 17.5 million shares in the first three months of 2021.That means he bought 2.2% of the entire company (worth at least $550 million) in the first 90 days of the year. Berkshire Hathaway now owns a 6.5% stake in Kroger – worth almost $1.9 billion.Berkshire Hathaway’s stake topped the former No. 3 investors, State Street Corp., another institutional investor. Mega investors Blackrock and Vanguard respectively hold 9.8% and 9.7% of Kroger.The stock has done well since Buffett bought in: Kroger shares have risen more than 41% since the end of the third quarter of 2019. Warren Buffett: Picking stocks ‘not as easy as it sounds,’ Gamestop bets like gamblingMore: Is Kim Kardashian’s stock portfolio better than Warren Buffett’s?An infrequent commentator on his holdings, Buffett’s investment style is a classic “value investor” who seeks to buy shares of strong companies selling unfairly at bargain prices. Over the years, Buffett has been widely quoted discussing his general philosophy:”It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” Buffett once quipped.A well-run grocery chain, Kroger stock fell out of Wall Street’s favor 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 home delivery.Last year, Kroger’s digital business surpassed $10 billion in sales, doubling during the COVID-19 pandemic.Kroger’s stock briefly hit a new all-time early this year of $42.99 on Jan. 27 before closing at $38.75 that day.This spring Kroger promised to double its digital sales again by 2023 and opened the first of 20 planned robot-powered warehouse in Monroe that will support home delivery service from suburban Cincinnati as far away as Columbus, Indianapolis and Louisville.Also this spring, Kroger began testing home delivery in Cincinnati via flying drones.Besides 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 500,000 workers.For the latest on Kroger, P&G, Fifth Third Bank and Cincinnati business, follow @alexcoolidge on Twitter.


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