Could Warren Buffett’s rare loser become a winner in your portfolio?
Berkshire Hathawaywas led by Warren Buffett from 1965 until his retirement at the end of 2025 and has a number of consumer staples stocks in its stock portfolio. But this is one of Berkshire’s worst-performing investments and may offer the biggest opportunity for new investors.
At the end of 2025, Berkshire Hathaway held 27.5% of the stock. Kraft Heinz (NASDAQ:KHC). At current prices, Berkshire’s stock is worth about $7.8 billion, but its investment cost basis was about $9.8 billion.
The position had a carrying value of $12.2 billion before taking a $3.8 billion impairment charge last year.
There was recent talk that Berkshire, led by Buffett’s successor Greg Abel, was selling its stake in Kraft Heinz as the packaged food company considered splitting into two companies. Kraft Heinz has since put those plans on hold, and Berkshire appears content to own Kraft Heinz stock for now. It’s unclear whether Berkshire sees itself in a good place going forward, but a number of things suggest to me that a comeback may be starting.
Why Kraft Heinz had a rare miss at Oracle of Omaha
Mr. Buffett may have won cleverly. S&P500 However, even legendary investors can lose money on their investments. Berkshire’s relationship with Kraft Heinz dates back to 2013.
That’s when the company partnered with private equity firm 3G Capital to take HJ Heinz private. Two years later, Heinz merged with Kraft Foods. Berkshire Hathaway sold 50% of its Heinz stock and consolidated 27.5% of publicly traded Kraft Heinz stock.
The post-merger stock price initially did well. However, within a few years, stock prices began hitting new lows in about 10 years. Initially, stock prices fell due to radical cost-cutting measures that did more harm than good. These job cuts initially increased profitability, but also led to underinvestment in the company’s brands. Additionally, this affected growth and profitability.
To alleviate this problem, Kraft Heinz pivoted, leading to a partial recovery. But within a few years, inflation became the new headwind. In addition to compressing profit margins, high inflation has caused consumers to shun branded products in favor of lower-priced alternatives. As a result, financial performance deteriorated again and stock prices returned to multi-year lows.
Berkshire and Buffett’s losses could be your gains
Under the Kraft Heinz proposed breakup discussed last fall, one entity would take over the company’s fast-growing seasonings and shelf-stable food businesses, while the other entity would take over the staple foods business.
However, management reportedly backed out after pressure from Berkshire. The move removed an important potential catalyst, but reduced the risk that Berkshire would reduce its position and put pressure on the stock. Additionally, other efforts are underway, including the company’s ongoing $600 million rebranding plan, which could also improve results. Kraft Heinz’s forward P/E ratio is about 12 times, which is in line with its competitors. But if earnings recover and sentiment toward food stocks improves, the stock could rise further. Until now, Kraft Heinz’s price-to-earnings ratio (PER) has hovered in the mid-10s.
That’s not all. The stock’s 6.6% forward dividend yield further increases value potential. Kraft Heinz didn’t work out for Berkshire or Buffett, but for those buying today, this stock could be a long-term golden opportunity.
Thomas Neal has no position in any stocks mentioned. The Motley Fool has a position in and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
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