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Kraft Heinz Co. (NYSE: KHC) fell nearly 28% on Friday after the company revealed an SEC investigation and announced a significant dividend cut. The news has reduced the market capitalization of Kraft Heinz by $ 16.3 billion and no investor is more disappointed than Warren Buffett.
Buffett's Bad Day
Before Friday night, Kraft was Buffett's sixth largest public holding company Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B), which was dragged down 1.8% itself on Friday.
By the end of 2018, Berkshire held more than 325 million shares of Kraft Heinz. On Friday, the value of this stake – assuming Buffett did not buy or sell any additional shares in 2019 – went from $ 15.6 billion to only $ 11.2 billion, a loss of paper. about $ 4.4 billion.
Buffett acquired its 325 million shares through unconventional means and partnered with 3G Capital to fund the merger of Kraft and Heinz in 2015. The amalgamated company officially began trading under the symbol KHC July 6, 2015 priced at $ 71 per share. For nearly four years, Buffett's value has declined by about 51%, a loss of about $ 11.8 billion.
Other affected
Buffett was not the only prestigious institutional investor to get burned on Friday. According to the latest statements by 13F, billionaire David Shaw's hedge fund, D.E. Shaw & Co., holds 4.5 million shares. Kenneth Griffin Citadel Advisors held 2.8 million shares and Jim Simons' Renaissance Technologies, 1.3 million shares. Mark Holowesko's partners, Holowesko, owned 1.2 million shares.
Together, the collection of four billionaires may have suffered paper losses exceeding $ 123 million Friday, not counting the hedging they could have on their holdings.
Other banks and investment institutions suffer as well. Here are Kraft Heinz's top five institutional investors, as well as the size of their holdings and paper losses on Friday, according to WhaleWisdom:
- 3G Global Food Holdings: 595.5 million shares, a loss of $ 7.97 billion.
- Berkshire Hathaway: 325.6 million shares, loss of $ 4.35 billion.
- Vanguard Group: 47.5 million shares, loss of $ 636 million.
- BlackRock, Inc. (NYSE: BLK): 37 million shares, loss of $ 495 million.
- Magellan Asset Management: 33 million shares, loss of $ 441 million.
How will Buffett react?
Berkshire investors will look forward to Buffett's annual letter of shareholders, which is expected to be released over the weekend. Any sign that he plans to unload Kraft Heinz's massive stance from Berkshire could lead to another important step for the stock. Conversely, if Buffett decided to buy Kraft Heinz "when there would be blood on the streets", other buyers could imitate him.
"It's a non-trivial possibility!" The founder of Seabreeze Partners Management, Doug Kass, said in an article published Friday, mentioning the possibility that Buffett increases its stake in Kraft Heinz.
"Warren" knows Kraft Heinz well (he has been on the board for several years) and is able to make a quick decision (do you remember the decision to invest in Bank of America in the bathtub?). encouraged by (record) great and flourishing horde of money. "
Berkshire reported $ 104 billion in cash at the end of the third quarter of 2018.
Related links:
What is the Buffett Indicator?
Q4 13F Roundup: How Buffett, Einhorn, Ackman and Others Adjusted Their Portfolios
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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