To The Moon

As the legendary era of the "Oracle of Omaha," Warren Buffett, draws to a close, his successor, Greg Abel, has officially been CEO of Berkshire Hathaway $Berkshire Hathaway(BRK.A)$ for just a month. Yet, a major move seems to be quietly brewing—one that could signal a rewrite of the company's long-standing investment philosophy.

Recently, a regulatory filing stirred the market like a stone thrown into a calm lake: Berkshire may be preparing to sell its entire stake in Kraft Heinz $The Kraft Heinz Company(KHC)$ .

Could this be the first defining moment of the "Post-Buffett Era"?

⚠️ An Unusual Risk Warning

On Tuesday, food giant $The Kraft Heinz Company(KHC)$ included a rare risk warning in a routine filing with the SEC, sending shockwaves through the market:

• The Disclosure: The filing stated that its largest shareholder, $Berkshire Hathaway(BRK.A)$, "may make an offer at any time to sell all of its 325,442,152 common shares."

• Market Reaction: Although Berkshire has not commented or made an actual move yet, the "announcement" alone caused $The Kraft Heinz Company(KHC)$ stock to fall nearly 4%, closing at $22.85.

• The Sentiment: The market senses a shift. Unlike the Buffett era, known for holding core assets forever, Berkshire might be preparing to "sell off" legacy holdings.

📉 A History of Regret: The Kraft Heinz Story

$The Kraft Heinz Company(KHC)$ has been a complex chapter in Warren Buffett’s career, often tinged with regret.

• The Beginning (2015): Heinz merged with Kraft Foods to create the world's 5th largest food and beverage empire. Buffett believed firmly in their brand's "economic moat."

• The Reality Check: Reality hit hard. Post-merger, the stock price plummeted by more than 70% from its peak.

• The Financial Hit:

  • In 2019, $The Kraft Heinz Company(KHC)$ recorded a goodwill impairment of $15 billion (Berkshire bore approx. $3 billion).

  • Last summer, Berkshire wrote down its investment by another $3.76 billion.

👤 The "Greg Abel" Factor: A New Strategy?

With Greg Abel officially taking the helm as CEO on January 1st, all eyes are on how his leadership differs from Buffett's.

What the Analysts are Saying:

• A Shift in Thinking: CFRA Research analyst Cathy Seifert notes that if this sale happens, it represents a shift. "Under Buffett, Berkshire typically only acquires, not divestitures. It is entirely conceivable that Abel will evaluate every subsidiary and discard those that don't meet his internal performance standards."

• Low-Hanging Fruit: Chris Ballard of Check Capital puts it bluntly: "Selling Kraft is probably one of the easiest decisions Greg could make. We won't be sad about the departure of this investment."

🔄 Post-Buffett Era: What This Signals

If the sale of $The Kraft Heinz Company(KHC)$ materializes, it signifies more than just cutting a loss. It foreshadows a subtle adjustment in how the $1 trillion empire is governed:

1. From "Collector" to "Manager":

   1. Buffett: Acted as a patient asset collector, valuing franchises and long-term compound interest.

   2. Abel: Known for operational expertise, he may prioritize dynamic portfolio management based on strict return on capital.

2. The $381.7 Billion Question:

   1. $Berkshire Hathaway(BRK.A)$ holds a record $381.7 billion in cash. Selling $The Kraft Heinz Company(KHC)$ adds to this "arsenal."

   2. The Challenge: How will Abel use this? Will he pursue elephant-sized acquisitions, or initiate the company's first-ever cash dividend?

3. Redefining the "Moat":

   1. $The Kraft Heinz Company(KHC)$ struggle highlights that traditional brand moats can erode. Abel’s future criteria may require sharper insights into shifting consumer trends.

Conclusion

For investors, this potential sale is a symbolically significant "farewell."

It suggests that while Berkshire Hathaway $Berkshire Hathaway(BRK.A)$ adheres to its core values, it is undergoing a necessary "metabolism" to adapt to a new economic environment. Warren Buffett’s legend is immortal, but Greg Abel’s chapter is just beginning. The market is holding its breath to see how the new captain steers this ship. 🚢

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