Berkshire Hathaway revealed the loss in its Q2 financial report released on 2/8. The report shows Berkshire currently holds a 27.4% stake in Kraft Heinz, with the value of that stake decreasing by $3.76 billion. Kraft Heinz had previously announced financial difficulties and is considering strategic options, including a potential split of the company.

This signifies a decade-long investment in the ketchup and condiment giant has soured for Berkshire.

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the company's annual shareholders meeting in Omaha, Nebraska, on 3/5. Photo: Reuters

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the company's annual shareholders meeting in Omaha, Nebraska, on 3/5. Photo: Reuters

Ten years ago, Berkshire acquired Kraft Foods, merging it with HJ Heinz to form Kraft Heinz. In 2019, the company first reported a $3 billion loss on the investment. At the time, Buffett admitted to overpaying for the deal, calling it one of his biggest investment mistakes.

Kraft Heinz's business has struggled as consumers increasingly opt for healthier alternatives. The company owns over 200 brands, including Oscar Mayer, Kool-Aid, Velveeta, and Jell-O.

Berkshire's operating earnings for Q2 fell to $11.16 billion, down from $11.6 billion in the same period last year. This includes an $877 million foreign exchange loss due to a weaker USD.

Buffett's conglomerate stated it remains cautious about market valuations amid uncertainty surrounding tariffs and overall economic growth. Retaliatory tariffs have caused consumer businesses in Berkshire's portfolio to delay orders, resulting in lower revenues.

Jazwares, the maker of Squishmallows plush toys, saw its revenue decline 38.5% in the first half of the year.

Given the uncertain macroeconomic environment, Berkshire has continued to sell stocks and accumulate cash. The conglomerate's cash and cash equivalents reached over $344 billion, a slight decrease from Q1.

Berkshire's stock has fallen over 12% since Buffett announced he would hand over the CEO role to Vice Chairman Greg Abel, 63, later this year. Buffett is widely considered the world's most famous investor, having transformed Berkshire from a struggling textile company into a conglomerate worth over $1,000 billion in over six decades.

Bao Bao (Reuters)