*It's a non trivial possibility!
Overnight I reflected upon the abysmal news at Kraft Heinz (KHC) :
* SEC accounting probe
* EPS miss (based principally on rising costs as top line growth was, more or less, in line)
* Lower profit guidance (see above, coupled with increased spending to support in place brands)
* $15 billion write off of goodwill
* A reduction in the cash dividend down to $1.60 per year (with the "savings" dedicated to reducing leverage)
The competitive landscape for consumer packaged goods has been deteriorating over the last several years - a position I introduced back in 2017 with "Buyer Beware of Consumer Staples Sellers Amid the Emerging Retail Monopsony" (though my thesis hasn't helped me not to lose money in (CPB) and KHC - while making a lot of money in (PG) ).
The above adverse events have historically been a call to investment arms by Warren Buffett.
Consider GEICO and American Express (AXP) - in the former case the investment was made under fundamental business duress, the later during the salad oil crisis.
Other investments, in (GE) , (BAC) , (GS) , etc. were made during economic and specific business crises - when, like Kraft, their "moats" were being challenged.
Warren "knows" Kraft Heinz well (he had been on the Board for several years) and is capable of making a quick decision (remember the decision to invest in Bank of America in the bath tub?).
He certainly is emboldened with a (record) large and burgeoning cash horde.
Given the fundamental company uncertainty, a call play might make sense and I plan to ask Tim "Not Judy or Phil" Collins for some options ideas.
Note: CNBC's Becky Quick will be interviewing Warren Buffett on Squawk Box on Monday (following the publication of his letter to Berkshire Hathaway shareholders on Saturday) - and will certainly ask about his Kraft investment. Stay tuned.
(Goldman Sachs is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GS? Learn more now.)
(This commentary originally appeared on Real Money Pro on Feb. 22. Click here to learn about this dynamic market information service for active traders and to receive Doug Kass's Daily Diary and columns from Paul Price, Bret Jensen and others.)
