U.S: Kroger poised for better performance after Berkshire Hathaway acquires stake
One of the world's most critical investors, Berkshire Hathaway, has acquired a 2.3% stake in grocery retailer Kroger.
In nearly immediate response, shares for the retailer jumped 7% on the market Tuesday after Warren Buffett's insurance company unexpectedly announced a US$500 million deal - making it one of the top 10-largest investors in the grocery chain.
A total net worth of more than US$80 billion, Buffett is the world's third-wealthiest person and analysts say that this move could help boost Kroger's success. The decision is thought to reflect a confidence in Kroger's management and stock outlook
Kroger's stock has not been doing so well as of late after Amazon joined the grocery business with its acquisition of Whole Foods in 2017. Despite a favorable pricing environment, it failed to deliver strong margins during its third quarter.
Such performance has made investors weary of Kroger's management and ability to create strong margins for investors. Now, as Berkshire Hathaway's management is considered strong, analysts say that this may help alleviate fears in the market about the grocer.
This new investor's stake is seen as a potential way for the retailer to rebound and market analysts say that traders should be on the lookout for Kroger's stock in upcoming weeks.