Warren Buffett's Berkshire Hathaway Inc. reported a 23 percent lower stake in Kraft Foods Inc. after the billionaire investor criticized Kraft Chief Executive Irene Rosenfeld for acquiring Cadbury PLC and selling a frozen pizza business.
Berkshire owned 106.73 million Kraft shares worth $3.23 billion as of March 31, down 31.54 million shares from 138.27 million three months earlier, filings with the U.S. Securities and Exchange Commission show.
Berkshire once owned 9.4 percent of Kraft's shares, making it the largest shareholder.
Editor’s Note: Warren Buffett’s Luckiest Day Could Also be Yours!
Yet Buffett has faulted Rosenfeld for making a "bad deal" in buying Cadbury, the British chocolate maker, in part by using Kraft stock he considered undervalued as currency.
At Berkshire's shareholder meeting on May 1, Buffett also called the sale of the pizza business to Nestle SA "particularly dumb" and said Kraft stock was selling for "considerably less than the value of its constituent parts."
While calling Rosenfeld "a perfectly capable manager," Buffett said: "I would have voted to keep my pizza and not do Cadbury."
Kraft was among several stocks Berkshire sold in the quarter. Berkshire sold a net $639 million of equities in the quarter, in part to fund its $26.5 billion takeover in February of railroad company Burlington Northern Santa Fe Corp.
"It doesn't necessarily say Buffett doesn't believe in Kraft's story, and he may still think it's undervalued," said Justin Fuller, an analyst at Midway Capital Research & Management in Chicago who runs the Buffettologist.com blog. "Kraft could just be a liquid source of capital to reallocate money elsewhere."
Kraft spokesman Mike Mitchell declined to speculate on why Berkshire reduced its Kraft stake, saying: "Mr. Buffett does not advise us when he is trading in our stock."
Mitchell maintained Cadbury is "a great transaction" for Kraft, which "gets us into higher growth categories, geographies and channels."
Berkshire did not immediately return a request for comment.
In Monday's filing with the SEC, Berkshire reported holding no stakes in health insurers UnitedHealth Group Inc. and WellPoint Inc., the regional bank SunTrust Banks Inc. and the insurer Travelers Cos Inc.
It also reported lower stakes in several companies, including oil company ConocoPhillips, drugmaker Johnson & Johnson, regional bank M&T Bank Corp., credit ratings company Moody's Corp. and consumer products company Procter & Gamble Co..
Buffett has often said he would sell stocks if he finds other investments he prefers. He does not ordinarily explain purchases and sales revealed in quarterly SEC filings.
Monday's filing also includes investments made by Berkshire subsidiaries, including a portfolio at car insurance unit Geico Corp. overseen by Lou Simpson. Buffett has said investors should not assume all the reported investment decisions are his.
Fuller said some of the reported lower share stakes may have stemmed from Simpson's activities.
The value of Berkshire's disclosed portfolio of U.S.-listed equities fell $7 billion from the fourth quarter to $50.93 billion, largely because Burlington Northern is no longer included in the calculations.
Berkshire Class A shares closed up $75 at $114,225 on Monday and its Class B shares rose 8 cents to $76.31.
Special: Warren Buffett is taking steps now to protect himself and his shareholders from the coming financial disaster he predicts will hit the U.S. Learn the secret to his inflation strategy.
© 2017 Thomson/Reuters. All rights reserved.