Greg Abel, Warren Buffett’s newly appointed successor as CEO of Berkshire Hathaway, appears to be considering his first significant corporate move: selling the conglomerate’s entire stake in Kraft Heinz. Kraft Heinz disclosed in a filing Tuesday that Berkshire Hathaway “may offer to sell, from time to time” its 325 million shares in the food company, which Buffett helped create in a 2015 merger with Brazilian investment firm 3G Capital.
The potential sale marks a departure from Buffett’s approach over six decades leading Berkshire. Berkshire took a $3.76 billion writedown on its Kraft Heinz stake last summer, and Buffett said last fall that he was disappointed in Kraft Heinz’ plan to split the company in two. Kraft Heinz shares fell nearly 4 percent to $22.85 after the filing announcement.
The move signals that Abel, who took office Jan. 1, may be conducting a broader strategic review of Berkshire’s vast holdings, which include insurance operations, utilities, a railroad, and numerous manufacturing and retail businesses.
Shifting priorities
Over the years, Buffett had concluded that the company’s brands lacked the competitive strength he initially believed. Consumers have increasingly switched to store brands and moved away from processed foods, eroding what Buffett once saw as the enduring power of Kraft Heinz’ portfolio.
In a reflection of his shifting views, Berkshire withdrew its two representatives from the Kraft Heinz board.
Strategic reassessment signals broader review
The filing came without comment from Berkshire, but the disclosure has prompted analysis from investment observers. Cathy Seifert, an analyst at CFRA Research, said Abel’s apparent willingness to divest may signal a broader reassessment of the conglomerate’s portfolio.
“My sense is that Greg Abel’s leadership style may be a departure from Buffett’s, and this sale, if completed, would represent a shift in corporate mindset,” Seifert said. “Berkshire under Buffett typically only made acquisitions—not divestitures. It’s not inconceivable, in our view, that Abel may likely assess every Berkshire subsidiary and decide to jettison those that do not meet his internal hurdles.”
Abel has managed Berkshire’s non-insurance companies since 2018, giving him deep familiarity with the conglomerate’s diverse operations.
Executing a logical first move
Chris Ballard, managing director at Check Capital, said selling Kraft represents a logical first move for the new CEO. “Selling Kraft is probably the most low-hanging fruit for Greg,” Ballard said. “We personally wouldn’t be sad to see the holding go.”
One question for any divestiture is how Berkshire would manage such a large stake without overwhelming the market. Ballard said he wonders whether a large prospective buyer might emerge for a substantial block of shares.
Buffett said last fall that Berkshire would not accept a block bid for its shares unless the same offer was made to all Kraft Heinz shareholders.