By Katherine Chiglinsky
The good news: Berkshire Hathaway Inc. finally has a handle on how Kraft Heinz Co.s business is performing after months of silence. The bad news: a big writedown for Warren Buffetts company may be coming.
Kraft Heinz shares plunged to a record low after reporting that profit slipped 15% in the companys home market. That leaves Berkshires 27% stake worth $8.5 billion, well below the $13.5 billion it has Kraft Heinz marked on its books.
Buffetts company has been burned by its Kraft Heinz bet as the packaged food giant reeled from a $15.4 billion writedown and a Securities and Exchange Commission subpoena announced in February. The billionaire investor, who teamed up with 3G Capital to form Kraft Heinz, said that month that he had no intention of selling any of Berkshires stake in the company but also didnt expect to buy more because it wasnt “worth as much.”
Berkshire said in its earnings report Saturday that it decided not to take a writedown on its Kraft Heinz stake as of June 30, despite a more than $3 billion gap between the market price and its carrying value at the time. That was due in part to the gap being only a few months old, and to Berkshires “ability and intent to hold the investment until recovery.” But BuffettsRead More – Source