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Warren Buffett’s Berkshire Hathaway loses $4.3 billion in single
day on Kraft Heinz plunge
Warren Buffett’s Berkshire Hathaway lost more than $4.3 billion in a single day after shares of Kraft Heinz — one of the investor’s largest holdings — plunged on slew of bad news including a dividend cut and a government investigation.
Stock of the packaged food giant, whose products include Heinz Tomato Ketchup, Jell-O and Kraft Macaroni & Cheese, plunged more than 27 percent Friday to close at $34.95. And for Berkshire — which owned more than 325 million shares at the end of 2018 — the losses were steep.
Berkshire Hathaway lost $4.31 billion in Friday’s session alone. Kraft is Berkshire’s sixth-largest holding behind Apple, a few banks and Coca-Cola.
As one of the world’s most revered money managers, Buffett is renowned for his bargain-based buying strategy and molding it into a sustainable, no-frills investing philosophy. Though simpler and perhaps less exciting than others tactics on Wall Street that try to time the market with short-term trades, Buffett’s method has long served as the backbone for many looking for reliable, drama-free returns over a longer period.
As such, double-digit stock moves are almost unheard of for the managers at Berkshire Hathaway, who gravitate toward sizable dividends and strong household brands with steady cash flow. Going forward, Kraft Heinz will award shareholders with a dividend of 40 cents each quarter, a marked drop from the 63 cents it paid out prior.
But Buffett’s affection for brands through investments like Kraft Heinz and Coca-Cola has come at a cost in recent years amid a shift among consumers toward healthier and local food and beverage options, which has weighed on sales growth of these once American staples.
Though Coca-Cola stock is up more than 5 percent over the past 12 months, the beverage giant has slipped more than 4.5 percent this month after management issued a gloomy 2019 profit projection during its fourth-quarter report. Kraft Heinz was down more than 28 percent in the past 12 months even before accounting for Friday’s losses.
But despite the secular shift away from prepackaged snacks and mounting stock losses, Buffett defended the investments as recently as May 2018 in an interview with CNBC’s Becky Quick.
“If you take Heinz Ketchup, it’s very, very, very hard to take share away from Heinz Ketchup. It’s hard to take share away from Philadelphia Cream Cheese,” he said at the time. “They’re still very, very good businesses.”
