Is Greg Abel Making His First Move to Redefine Berkshire Hathaway?

Core Viewpoint - The recent SEC filing by Kraft Heinz indicates a potential divestiture of Berkshire Hathaway's entire 27.5% stake, suggesting a possible shift in strategy under new CEO Greg Abel following Warren Buffett's departure [2][10]. Group 1: Berkshire Hathaway's Investment in Kraft Heinz - Berkshire Hathaway's involvement with Kraft Heinz began in 2013 with a $23 billion acquisition of H.J. Heinz, followed by a $46 billion merger with Kraft Foods in 2015, creating a combined entity with well-known brands [3][4]. - The merger aimed to achieve cost synergies and leverage brand loyalty, resulting in Berkshire holding a significant equity position of 27.5% [4]. Group 2: Challenges and Write-downs - By 2019, issues with the merger became apparent, leading Buffett to admit that Berkshire overpaid for Kraft Heinz, with a valuation that required unrealistic returns [5]. - Kraft Heinz announced a $15.4 billion write-down on its brands, causing a 27% stock drop, and Berkshire recorded a $3 billion write-down in the same year, followed by another $3.76 billion write-down in August [5][6]. Group 3: Potential Shift Under Greg Abel - The SEC filing raises questions about whether Abel's leadership signifies a departure from Buffett's long-term holding strategy, as Kraft Heinz shares fell 7.5% post-announcement, valuing Berkshire's stake at approximately $7.7 billion [7][10]. - Kraft Heinz's planned split into two independent entities by 2026 alters the original investment thesis, prompting considerations for a potential sale under Abel [8][9]. Group 4: Strategic Implications - The restructuring of Kraft Heinz into two distinct businesses may create up to $300 million in "dis-synergies," diverging from the original vision of a unified food powerhouse [9]. - A potential divestiture could align with Buffett's principle of adapting to new realities, allowing Berkshire to prioritize capital allocation and seek higher-return opportunities [10][11].