Berkshire Hathaway's new CEO, Greg Abel, is shaking things up by signaling a break from the company's long-standing policy of holding onto underperforming investments. As part of his debut as the helm, Abel has set in motion a potential sale of Berkshire's stake in Kraft Heinz, a move that would be a stark departure from former CEO Warren Buffett's approach.
Under Buffett's leadership, Berkshire has taken a rare stance by sticking with Kraft Heinz for over a decade, despite its struggles. The conglomerate acquired a majority stake in the company back in 2013 for $9.8 billion but has yet to make any significant gains on investment. Over the past five years, Kraft Heinz shares have plummeted more than 30%, and Berkshire has taken two major write-downs, totaling over $6.7 billion.
The move comes as Abel seeks to revamp Berkshire's investment portfolio, which has long been seen as a reflection of Buffett's value-driven approach. However, in recent years, the company has struggled to find success with its investments, including Kraft Heinz.
Analysts say that Abel is sending a clear signal that he intends to follow a more activist strategy, one that involves regularly reviewing and potentially exiting underperforming investments. "It reflects Abel's desire to clean up his investment portfolio early in his tenure," said Erin Lash of Morningstar.
While the sale of Kraft Heinz would mark a significant change from Buffett's playbook, which emphasized patience and holding onto businesses for the long haul, it could also be seen as an opportunity for Berkshire to cut its losses. "We think the market is unlikely to grant a higher valuation until a durable improvement in volumes becomes evident," Lash added.
As Abel continues to navigate the complexities of running one of America's largest conglomerates, his decision on Kraft Heinz and other underperforming investments will likely be closely watched by investors and analysts alike.
Under Buffett's leadership, Berkshire has taken a rare stance by sticking with Kraft Heinz for over a decade, despite its struggles. The conglomerate acquired a majority stake in the company back in 2013 for $9.8 billion but has yet to make any significant gains on investment. Over the past five years, Kraft Heinz shares have plummeted more than 30%, and Berkshire has taken two major write-downs, totaling over $6.7 billion.
The move comes as Abel seeks to revamp Berkshire's investment portfolio, which has long been seen as a reflection of Buffett's value-driven approach. However, in recent years, the company has struggled to find success with its investments, including Kraft Heinz.
Analysts say that Abel is sending a clear signal that he intends to follow a more activist strategy, one that involves regularly reviewing and potentially exiting underperforming investments. "It reflects Abel's desire to clean up his investment portfolio early in his tenure," said Erin Lash of Morningstar.
While the sale of Kraft Heinz would mark a significant change from Buffett's playbook, which emphasized patience and holding onto businesses for the long haul, it could also be seen as an opportunity for Berkshire to cut its losses. "We think the market is unlikely to grant a higher valuation until a durable improvement in volumes becomes evident," Lash added.
As Abel continues to navigate the complexities of running one of America's largest conglomerates, his decision on Kraft Heinz and other underperforming investments will likely be closely watched by investors and analysts alike.
I'm not sure if it's a good thing or not...I mean, Warren Buffett was all about holding onto businesses for the long haul, and that's what made Berkshire so successful in the first place 
. But at the same time, $6.7 billion write-downs is a big deal 
. It feels like Abel is trying to be more agile and flexible with his investments, which is kinda cool 
. I guess it's about finding a balance between holding onto your core businesses and not being afraid to cut your losses 
. Only time will tell if this new approach will pay off or not 
.
they've been stuck with kraft heinz for ages, but now it looks like they're finally willing to cut their losses 
i'm curious to see how this plays out, especially since abel's all about being more "activist" with his investments 
it's like he's saying, "hey, we're not just gonna sit around and hold onto these losing bets anymore 
" 
. Under Warren Buffett's leadership, the company's focus on value-driven investing has yielded impressive returns, but it appears that Greg Abel is opting for a more agile approach 
.
I mean, come on, if you're going to sell out, at least have the decency to do it gradually rather than abandoning ship. And what about the stability and predictability that Buffett brought to the company? It's not like Abel is going in blind – he knows exactly what works and what doesn't from reading Buffett's playbook. This whole thing just reeks of panic and instability, which is completely at odds with Berkshire's brand. I'm expecting a massive sell-off and market volatility as a result of this move 
Abel is like a breath of fresh air for Berkshire! They've been holding onto that struggling investment for way too long 
. It's time to cut their losses and make some smart moves 
. Fingers crossed it works out for them! 
. It's like he's saying that sometimes you gotta take a loss to make room for winners 
.
. I mean, Buffett was all about patience and holding onto businesses because he knew they would eventually turn around, but Abel is more focused on cutting losses ASAP 
. But in this case, I think it's time for Abel to show us that sometimes being negative means recognizing when something's not working and making changes 
.
I think it's cool that new CEO Greg Abel is shaking things up at Berkshire Hathaway 
.
.
. Only time will tell if Abel's strategy pays off 
. On the other hand, maybe Abel is a genius and he can work some magic to turn it around 
. But at the same time, shouldn't we be worried about him getting rid of all those underperforming investments? It's like, if you're not careful, you'll end up losing money everywhere 
I'm low-key relieved that Berkshire is finally shaking off those sinking investments 
. Warren Buffett's way of sticking with them, I get it, but 10+ years is just too long 
. This move shows Abel's got some guts and is willing to take calculated risks 
? Only time (and analysts like Erin Lash 
) will tell.
. It's actually kinda refreshing to see someone new come in with a fresh perspective and start making some tough decisions 
️. Of course, there are risks involved, like potentially losing a big chunk of money if the sale doesn't work out 
Greg Abel is like, totally breaking free from Warren Buffett's mold 
! I mean, Berkshire has stuck with Kraft Heinz for ages, despite it being a total dumpster fire 
. It's about time someone cleaned up the mess 
. I mean, $6.7 billion in write-downs is no joke 
Abel's move could signal a new era of transparency and accountability at Berkshire Hathaway. It's like he's saying, "We're not afraid to take losses if it means we can find better opportunities." 
. I don't trust this activist strategy thing... sounds like a bunch of mumbo-jumbo to me