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Warren Buffett Discussed 3G Capital and Kraft Heinz


Jun. 25 2019, Updated 9:28 a.m. ET

Warren Buffett

Warren Buffett, Berkshire Hathaway’s (BRK-B) chairman, denied reports of a rift between him and 3G Capital. Reports of tension between the two companies surfaced amid Kraft Heinz’s (KHC) underperformance. Kraft Heinz has fallen more than 28% this year.

In February, Kraft Heinz released its earnings, which missed analysts’ estimates. The company announced a $15.4 billion write-down and revealed a subpoena from the Securities and Exchange Commission. Kraft Heinz also slashed its dividend. The stock saw a selling spree after its earnings release. Kraft Heinz lost more than a quarter of its market capitalization. In a CNBC interview, while Buffett called Kraft Heinz a “wonderful business,” he said, “I was wrong in a couple of ways about Kraft Heinz.” Buffett also said, “We overpaid for Kraft.”

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Kraft Heinz

Berkshire Hathaway is Kraft Heinz’s biggest shareholder followed by 3G Capital. Berkshire Hathaway and 3G Capital own a little under 50% of Kraft Heinz. Denying reports of tension with 3G Capital, Buffett called 3G co-founder Jorge Paulo Lemann “a good friend.” CNBC reported that “Buffett also said he plans to see Lemann next month at Allen & Co.’s Sun Valley conference and to attend Lemann’s 80th birthday party in August.” CNBC also reported that “Buffett also expressed support for the incoming CEO at Kraft Heinz, Miguel Patricio, who takes over on Monday.”

Berkshire Hathaway is underperforming

Kraft Heinz is the biggest loss this year among Berkshire Hathaway’s major holdings. Despite Apple outperforming markets this year, Berkshire Hathaway has underperformed markets by a wide margin in 2019. Recently, Bernstein’s head of European quantitative strategy, Inigo Fraser-Jenkins expressed his views on why value investment strategy has underperformed lately.

Read Which Grove Is Driving Berkshire Hathaway’s Underperformance? to analyze why Berkshire Hathaway is underperforming markets in 2019.


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