Warren Buffett just lost $1 billion in 2 days after Kraft Heinz disappointed again

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Warren Buffett lost more than $US1 billion this week after Kraft Heinz stock plummeted 11% in two days.

The famed investor’s Berkshire Hathaway conglomerate owns about 27% of the food giant, according to Bloomberg data. The value of its stake plunged to $US8.7 billion from $US9.8 billion between Thursday and Friday, after a one-two punch of disappointing earnings and a credit-rating cut pummelled Kraft Heinz shares.

On Thursday, the maker of Heinz ketchup and Kraft macaroni and cheese revealed a 5% drop in fourth-quarter net sales and a 14% slump in adjusted earnings per share. CEO Miguel Patricio said the performance was “disappointing” in a press release.

On Friday, Fitch cut Kraft Heinz’s credit rating to BBB- from BB+, downgrading its bonds to non-investment grade or “junk,”Bloomberg reported. The credit-rating agency cited the company’s large debt pile, dwindling profits, and negative outlook.

Kraft Heinz stock has nosedived almost 75% from its peak in February 2017, underscoring the magnitude of Buffett’s mistake.

The so-called “Oracle of Omaha” partnered with private-equity group 3G Capital to buy Heinz for about $US28 billion on Valentine’s Day in 2013. The pair then cofinanced Heinz’s $US50 billion mega-merger with Kraft Foods in 2015. Kraft-Heinz’s market capitalisation is currently less than $US33 billion.

“We try to buy good businesses at a decent price, and we made a mistake on the Kraft part of Kraft Heinz,” Buffett said at Berkshire’s annual meeting last year. “We paid too much money.”