I saw that Warren Buffet wasn't pulling any shares out of Kraft Heinz (NASDAQ:KHC), do you guys think this is a vote of confidence by him that it will bounce back? - Seedly
 

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Asked by Anonymous

Asked on 10 Mar 2019

I saw that Warren Buffet wasn't pulling any shares out of Kraft Heinz (NASDAQ:KHC), do you guys think this is a vote of confidence by him that it will bounce back?

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Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Answered on 12 Mar 2019

Warren Buffet's firm is a majority stakeholder in Kraft Heinz, and it may not be so much of a vote of confidence rather than a "hold the fort" kind of move - imagine if he sold his stake, the shareholders would be up in arms in panic to sell off all of their shares on KHC. The Oracle himself would have caused the downfall of KHC almost singlehandedly.

So perhaps I'm being a little cynical here, but I feel that unless KHC overhauls their product line and starts to pump out crowd favourites, they won't exactly be bouncing back anytime soon. I'm somewhat bearish on their growth potential, their growth in revenue has thus far been fueled by a cut in their profit margins from a slash in prices, which will not work in the long term. We'll have to wait and see... but I'm not going to long it anytime soon.

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