Warren Buffett's Berkshire Hathaway Buys a Stake in Kroger

The Oracle of Omaha's moves in and out of stocks are followed closely by investors -- and for good reason: Under Warren Buffett's leadership, Berkshire Hathaway (NYSE: BRK.B)(NYSE: BRK.A) stock has compounded at an average annual rate nearly twice the rate of the S&P 500 (including dividends) since 1965. That's why it's not surprising that shares of Kroger (NYSE: KR) jumped more than 6% in after-hours trading on Friday, when Berkshire Hathaway revealed a stake in the company.

While it's always easier to see why Buffett might like a stock after Berkshire reveals a position in it, Kroger does look like a stock in which the famed investor would be interested. Indeed, I've argued the stock is a buy several times over the last 12 months. Shares trade at a conservative valuation even as same-store sales growth looks poised to accelerate for a second year in a row. Further, management has been a good steward of capital, paying a steadily increasing dividend and initiating an aggressive share repurchase program. (Sounds a bit like Apple, Berkshire's largest holding.)

Here's a closer look at Berkshire Hathaway's purchase -- and why Buffett might like it.

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Source Fool.com