Investing Idol Worship: The Kraft Heinz Lesson

When Kraft Heinz reported earnings last Friday (February 22), they shocked markets with a trifecta of bad news - stagnant operating results, a massive goodwill impairment and mention of accounting irregularities being investigated by the SEC. When they followed up by cutting dividends, the stock collapsed more than 25%. The shock was amplified for investors because of the pedigree of the two lead investors in the company - Berkshire Hathaway and 3G Capital, both with reputations for investing acumen and shrewdness. If you needed a reminder that Warren Buffett is human (though he is been open about that truth for a long time), makes mistakes and has investing blind spots, you got it. More generally, though, no investor, no matter what his or her track record, should be put on a pedestal and followed blindly. In the session, I also do an updated valuation of Kraft Heinz, which will guide my actions, but if you buy into the broader lesson, should not guide yours.
Slides: http://www.stern.nyu.edu/~adamodar/pd...
Blog Post: https://bit.ly/2NyBQuT