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Buffett: Beverages and Ketchup Didn’t Work Well in Q1

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Beverages and ketchup

Historically, Warren Buffett, Berkshire Hathaway’s (BRK-B) chairman, had a flair for iconic consumer brands. At the end of the fourth quarter, Berkshire Hathaway was Kraft Heinz’s (KHC) biggest shareholder. The company also has stakes in Coca-Cola (KO) and General Motors (GM). The company has a small position in Proctor & Gamble (PG). Berkshire Hathaway was Apple’s (AAPL) second-largest shareholder at the end of the fourth quarter. Buffett sees Apple as a consumer company and not as a tech company.

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Buffett has usually stayed away from technology stocks. Berkshire Hathaway has dabbled in IBM (IBM) and Oracle (ORCL) in the past. Last year, Buffett admitted that he missed out on companies like Amazon (AMZN) and Alphabet (GOOG).

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Price action

Looking at the first-quarter performances, Coca-Cola closed with marginal losses. Kraft Heinz fell 23.2% in the first quarter. Kraft Heinz was the biggest loss among Berkshire Hathaway’s major investments. General Motors (GM) saw an upwards price action of 12.0%, which was slightly lower than the S&P 500’s (SPY) first-quarter returns. Automotive stocks have been out of favor with the markets amid moderation in US vehicle sales. While Ford (F) outperformed the S&P 500 in the first quarter, Tesla (TSLA) and NIO (NIO) saw double-digit declines.

Returns haven’t been convincing

While consumer stocks have delivered the goods for Berkshire Hathaway over the years, their performance hasn’t been that convincing recently. Kraft Heinz fell more than a quarter in February after announcing a massive write-down and a subpoena. While calling Kraft Heinz a “wonderful business,” Buffett admitted, “I was wrong in a couple of ways about Kraft Heinz.” He said, “We overpaid for Kraft.”

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