Berkshire Slashes Kraft Heinz Valuation With $3.8B Writedown

Berkshire Hathaway booked a $3.8 billion after-tax impairment on its 27.4% stake in Kraft Heinz during the second quarter, marking a sharp reassessment of a once-celebrated investment. Net income plunged 59% to $12.37 billion from a year earlier, while operating earnings—a preferred metric for Warren Buffett—fell 4% to $11.16 billion.

Strategic Misstep Comes Full Circle

The writedown cuts Berkshire’s carrying value of Kraft Heinz to $8.4 billion, down from $13.5 billion last year. The decision reflects a shift in Berkshire’s view of the stake: losses are no longer deemed temporary. It’s the clearest admission yet that the 2015 Kraft-Heinz merger, once championed by Buffett, was mispriced and misjudged.

Kraft Heinz continues to face structural headwinds. Changing consumer preferences, weak brand pricing power, and mounting inflationary pressures have eroded performance. The company is reportedly weighing a breakup into separate grocery and condiments units—a restructuring that could unlock value but comes with execution risk.

Financial Strength Shields Broader Impact

Despite the charge, Berkshire's balance sheet remains robust. It exited the quarter with $344 billion in cash, the highest in its history, and posted solid gains in core operations. Profits rose 20% at BNSF Railway and 7% at Berkshire Hathaway Energy. Losses in insurance underwriting were offset by strength in float and investment income.

Currency-related losses shaved $877 million from results. Notably, Berkshire refrained from share buybacks in Q2 and sold more equities than it purchased for the 11th consecutive quarter. The firm remains deeply risk-averse in the current valuation environment.

Shareholder Patience Wears Thin

Berkshire’s Class B shares have underperformed the S&P 500 by over 20 percentage points since May. Questions around capital allocation and Buffett’s succession loom larger, with Vice Chair Greg Abel expected to assume full leadership before year-end.

The Kraft Heinz charge adds to investor pressure. While Berkshire has exited the board of Kraft Heinz, analysts speculate a gradual equity exit could follow. Any breakup or spinoff would likely create new valuation tracks but could also trigger volatility.

Tips for Traders

• Watch Berkshire Hathaway (NYSE: BRK.B) for signs of portfolio rotation or further impairments in Q3 disclosures.

• Track Kraft Heinz (NASDAQ: KHC) price action—breakup rumors could drive speculative trading and sharp repricing.

• Focus on BNSF and Berkshire Hathaway Energy metrics—core strength matters more with asset writedowns in play.

• Review 13F filings for signs of Berkshire trimming positions in slow-growth sectors or reallocating into higher-liquidity plays.

• Consider relative plays between consumer staples under pressure and defensive industrials with clean balance sheets.

• Monitor credit markets—Kraft Heinz debt may reprice if the breakup narrative gains institutional traction.