Warren Buffett's Berkshire Hathaway is taking a nearly $4 billion hit as Kraft Heinz craters to a record low

  • Kraft Heinz shares plunged in pre-market trading Friday after the company reported quarterly results the prior evening.
  • The company disclosed it received a subpoena from the Securities and Exchange Commission related to its accounting practices. It also revealed a $15 billion charge related to the value of its Kraft and Oscar Mayer trademarks.
  • Warren Buffett's Berkshire Hathaway is a major shareholder in the company; it owns nearly 326 million shares, or a 26.71% stake worth $15.4 billion before Friday's plunge.
  • Berkshire likely saw an estimated $3.9 billion loss as the stock plunged to a record low.
  • Watch Kraft Heinz trade live.

Kraft Heinz's biggest investor, the Warren Buffett-led Berkshire Hathaway, is seeing a substantial loss as shares were poised to open at a record low on Friday.

The food and beverage giant plummeted in pre-market trading on Friday, down about 25%, extending its losses from the evening prior, after reporting quarterly results.

Kraft disclosed in its quarterly report that it received a subpoena from the Securities and Exchange Commission related to an investigation into its accounting policies. It also revealed a $15 billion charge related to the value of its Kraft and Oscar Mayer trademarks.

As of December 31, 2018, Berkshire held nearly 326 million shares of Kraft Heinz, amounting to a 26.71% stake. That was worth about $15.4 billion before Thursday night's plunge. Berkshire likely saw a loss of about $3.9 billion due to the stock's rout. 

Buffett, Berkshire's chairman and CEO, left Kraft's board last April after a five-year run. "My stepping down from the board represents no change of any kind in my or Berkshire's relationship with 3G," Buffett told The Financial Times at the time. "I am on no public boards (except Berkshire) and expect to be on none in the future."

In 2015, H.J. Heinz acquired Kraft Foods Group. Buffett had purchased Heinz in 2013, in partnership with 3G Capital. Buffett paid $72.50 a share, or about twice where the stock was set to open on Friday.

On Thursday, Kraft Heinz said it was cutting its quarterly dividend to $0.40 a share from about $0.63, citing a challenging market environment due to cost inflation.

As far as its quarterly results, Kraft reported adjusted earnings of $0.84 a share on net sales of $6.89 billion, falling short of the $0.94 and $6.94 billion that analysts surveyed by Bloomberg were expecting.

Berkshire, for its part, is expected to release its own quarterly results on Saturday, alongside Buffett's widely anticipated letter to shareholders.

See Also:

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.