Will Warren Buffett's Berkshire Dump Kraft Heinz Stock? 2 Analysts Warn Investors To Brace For Likely Move

Investors and analysts are bracing for near-term risk in Kraft Heinz's stock over concerns that its largest investor, Berkshire Hathaway, might be mulling selling a big chunk of its shares.

Last week, the packaged foods company drew ire from Warren Buffett after it announced that it would split into two companies, one focused on groceries and the other on sauces and spreads. The announcement sent the company's shares down 7% on Tuesday, and Buffett later said he was "disappointed" with the plan. A string of analysts cut their price targets on the stock in the aftermath.

Berkshire is the single largest shareholder of Kraft Heinz, with a 27.5% stake. It has maintained its holdings since the 2015 merger that Buffett helped facilitate in partnership with Brazilian private equity firm 3G Capital.

"We expect Berkshire's tenuous ownership position to continue to pressure the shares," investment research firm TD Cowen stated in a note, as reported by CNBC. "These comments reinforce our view that Berkshire's position represents an overhang to the stock due to the likelihood they will exit their position."

Don Bilson, head of event-driven research at Gordon Haskett, told the news network that the possibility of Buffett dumping the stock compounds the concerns around the demerger plan.

If Berkshire decides to sell shares on the open market, it is subject to regulatory reporting of any sales within two business days. This follows Berkshire's booking of a $3.76 billion write-down on its Kraft Heinz stake in the second quarter.

On Stocktwits, the retail sentiment dropped to 'bullish' as of early Monday, from 'extremely bullish' just after the company announced its split last week. Watchers' posts were were split between frustration over the stock’s performance and optimism from those betting on upside, particularly with rate cuts on the horizon.

Kraft Heinz's shares are down 11% year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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