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Kraft Heinz Stock Craters After Second-Largest Shareholder Sells 25 Million Shares

(Updated: 4:45 p.m. EST, 9/17/2019)

Topline: Shares of Warren Buffett-backed Kraft Heinz fell more than 4% on Tuesday, following the news that its second-largest shareholder has again trimmed its stake in the food company.

  • Brazilian private equity giant 3G Capital Partners, founded by Jorge Paulo Lemann, disclosed in a regulatory filing on Monday that it had sold 25.1 million shares, at a price of $28.44 per share.
  • The sell-off slashes 3G Capital Partners’ stake by roughly 9%, but they remain the second-largest shareholder, still owning about 20% of Kraft.
  • “3G remains a committed long-term owner of the Company and has no current plan or intention to sell any additional shares,” a Kraft Heinz spokesperson told Forbes. 3G founder and Kraft Heinz board member Jorge Paulo Lemann increased his own personal holdings of the stock by around $100 million; Lemann and certain other 3G partners will be acquiring nearly 30% of the offered shares, the spokesperson said.
  • The news follows a sharp decline in Kraft Heinz stock last month: Shares sank 16%—to a new all-time low, after the company reported yet another quarter of missed earnings, a large decline in sales during the beginning of 2019, and $1.2 billion in business write-downs.
  • The stock has markedly lagged the broader market this year: Kraft Heinz has fallen almost 32% so far in 2019, from near $45 per share to below $30. 
  • The largest shareholder is Warren Buffett’s Berkshire Hathaway, which owns nearly 27% of Kraft Heinz. Despite the stock’s poor performance, Buffett has stuck by the company and has yet to add or sell shares.
  • Kraft Heinz has two “buy” ratings, 14 “hold” ratings, and five “sell” ratings from Wall Street analysts, according to Bloomberg data.

What to watch for: Given the recent news and apparent loss of faith Kraft Heinz stock, will Buffett follow suit and sell of some of Bershire Hathaway’s stake in the company? By early last month, Berkshire had already lost almost $5 billion on its investment this year.

Crucial quote: “The level of decline we experienced in the first half of this year is nothing we should find acceptable moving forward,” Kraft Heinz CEO Miguel Patricio said in the latest earnings announcement. He admitted there was “significant work ahead” to “change the trajectory of our business.”

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