Buffett Successor May Sell Kraft Heinz Stock in First Major Move

Warren Buffett’s successor, Greg Abel, is contemplating his first major action since assuming the CEO role at Berkshire Hathaway. Recent disclosures from Kraft Heinz indicate that the company’s largest shareholder may consider selling its significant stake.

Potential Sale of Kraft Heinz Stock

Kraft Heinz issued a warning to investors, stating that Berkshire Hathaway might sell its 325 million shares in the food corporation. This move is notable as Buffett, who co-created Kraft Heinz in 2015 with 3G Capital, has historically been reluctant to sell, even when he has lost faith in a business.

Background on Kraft Heinz

• Berkshire Hathaway and 3G Capital merged Kraft and Heinz in 2015.
• The merger aimed to capitalize on the power of their brands.
• Berkshire Hathaway recently faced a $3.76 billion writedown on the Kraft Heinz investment.

The merger has been viewed critically by Buffett, especially after a disappointing proposal to divide Kraft Heinz into two entities. Additionally, Berkshire’s representatives resigned from the board last spring, signaling potential dissatisfaction with the company’s direction.

Market Response and Analyst Insights

Following the announcement regarding the potential sale, Kraft Heinz shares dropped nearly 4% to $22.85. Market analysts, including CFRA Research’s Cathy Seifert, suggest this initial step may be part of a broader review of Berkshire Hathaway’s investments.

• Berkshire Hathaway’s stock portfolio exceeds $300 billion.
• The conglomerate comprises various operations, including insurance, utilities, and manufacturing.

Seifert speculates that Abel’s management approach may diverge from Buffett’s longstanding strategy. Historically, Berkshire has focused on acquisitions rather than divestitures, which makes potential sales significant.

Future Considerations for Berkshire Hathaway

Abel, who has managed non-insurance companies since 2018, became CEO on January 1, 2023. As shareholders await his strategic decisions, some believe selling Kraft Heinz is a logical first move. Investment manager Chris Ballard commented that a sale would be seen as the easiest option for Abel, although the logistics of offloading such a large stake could pose challenges.

Buffett has stated that any substantial offers would need to be presented to all Kraft Heinz shareholders, further complicating potential negotiations.