The Kroger Co. (KR)
Supermarket giant Kroger has been around for almost 140 years and runs more than 2,700 grocery retail stores out of its Cincinnati head office.
It also owns fine jewelry stores under the Fred Meyer Jewelers and Littman Jewelers, food production and manufacturing facilities, supermarket fuel centers, and pharmacies in its combination food and drug stores.
Berkshire added 10.7 million shares of Kroger in Q2, increasing its holding by 21%. And that was after adding 17.5 million shares (a 52% increase in its position) in Q1. The company now holds nearly 62 million shares at a value of $2.4 billion, making it the third-largest owner in the company.
The grocery store business checks off many boxes for Buffett: It’s simple, durable, and not too susceptible to technological change.
People will always need to eat.
In 2020, Kroger reported $132.5 billion in sales with an average of 9 million customers visiting its stores daily.
And although it’s an old-school bricks-and-mortar retailer, Kroger has been increasing its omnichannel presence to keep up with the times — the company’s delivery service now converse about 98% of the households in its market areas.
Kroger also boasts a treasure trove of customer data — which the company used to make 258 billion personalized recommendations to customers in Q1.
“Kroger's data and personalization capabilities will contribute to increasingly meaningful ways to grow our e-commerce reach and capability, and we continue to elevate our personalized customer experience with our data today,” said Chairman and CEO Rodney McMullen on the company’s Q1 call with analysts
Aon PLC (AON)
Buffett knows the insurance industry very, very well. So when he makes a purchase in the sector, investors would do well to take notice.
In Q2, Berkshire upped its stake 7% in global insurance brokerage Aon to 4.4 million shares, making it a billion-dollar stake.
Given all the uncertainty around the globe, Aon looks like a rather timely bet for Buffett.
“The world is becoming more volatile,” Aon CEO Greg Case said on the company’s Q2 earnings call. “Just look at the socioeconomic impact of the pandemic, the rise of state-sponsored cyberhacking, the floods in Eastern Europe, the fires in Western America and the challenges globally from working remotely.”
Aon also has plenty of operating momentum working in its favor.
In the most recent quarter, revenue increased 16% to $2.9 billion. More importantly, free cash flow — something Buffett always loves to see — improved 13% to $1.3 billion. Management even repurchased 1.1 million shares during the quarter for $240 million.
Aon’s impressive free cash flow generation is fueled by the tollbooth nature of its brokerage model, established corporate relationships, and industry-topping client retention rates.
With the stock trading at a forward price-to-earnings ratio of 24, pretty much in line with the S&P 500, Aon’s Buffett-approved potential might be worth pouncing on.
How to get your share without Buffett’s riches
You don’t need Buffett's billions to start building a position in either Kroger or Aon.
In fact, if you have a particularly small budget, you can use an investing app that allows you to buy “slices” of shares for big-name stocks Buffett is investing in — especially one that comes with no fees or commissions.
You can even use an app that allows you to invest with just your “spare change," rounding up to the nearest dollar on all your purchases to help you build a diversified portfolio over time.
With a little help from the right platform, you might be able to use Buffett's great stock ideas to earn some great investment profits.
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.