Kraft Heinz(US:KHC) Hua Er Jie Jian Wen·2025-08-03 01:38Core Insights - Warren Buffett's Berkshire Hathaway has reported a significant write-down of $3.8 billion on its investment in Kraft Heinz, reducing its book value to $8.4 billion from over $17 billion at the end of 2017, confirming perceptions of investment failure [1][2] - Despite the apparent loss, analysis suggests that Buffett's investment strategy and favorable terms have mitigated the impact, allowing him to remain in a relatively advantageous position [3] Investment Performance - The write-down is attributed to the continuous decline in Kraft Heinz's fair value, with the company's stock price dropping 62% since the merger in 2015, while the S&P 500 has increased by 202% during the same period [2] - Berkshire's total investment in Kraft Heinz, including additional investments during the merger, reached $9.8 billion, with the current market value of its 27.4% stake at approximately $8.8 billion [3] - Over the years, Berkshire has received around $6.3 billion in cash dividends from this investment, leading to a total return of nearly 60% when combining market value and dividends [3] Comparison with Other Shareholders - Other shareholders who held Kraft Foods stock since the merger have seen a total return of only 8% over the past decade, highlighting Buffett's superior position [4] - If these shareholders had invested in Unilever instead, their investment could have nearly doubled, emphasizing the relative underperformance of Kraft Heinz [4] Lessons Learned - The merger of two mediocre companies does not necessarily create a strong entity, as Kraft Heinz faces challenges from shifting consumer preferences towards healthier food options, with projected revenue decline of 3% this year [5] - Buffett's ability to negotiate better terms allows him to achieve favorable outcomes even in less successful investments [5]