Warren Buffett thinks Berkshire (BRK.B, $201.91) overpaid for Kraft Heinz (KHC, $34.95), but will not sell shares

Warren Buffett feels that he might have overpaid for Kraft Heinz shares.

In an interview with CNBC, the legendary investor and CEO of conglomerate Berkshire Hathaway rued, "I was wrong in a couple of ways about Kraft Heinz”, and admitted that Berkshire paid more than they should have for owning Kraft Heinz shares.

However, Buffett still believes Kraft Heinz is “a wonderful business in that it uses about $7 billion of tangible assets and earns $6 billion pretax on that”, as mentioned by him in the interview. But he also indicated that for Berkshire’s investment to be successful,  Kraft has to earn $107 billion (versus $7 billion) since Berkshire and “certain predecessors” paid $100 billion in tangible assets.

On Friday, shares of processed food giant Kraft Heinz tumbled more than -27%, following news of a $15 billion write-down on its Kraft and Oscar Mayer brands, disclosure of an ongoing Securities and Exchange Commission investigation into its accounting policy, the announcement of a dividend cut, and lower-than-expected fourth quarter earnings & revenue. Berkshire holds around 27% of the company’ equity, and lost -$4.3 billion in a single day due to to Kraft's stock price plunge on Friday.

But Buffett said that Berkshire does not intend to sell its stake in Kraft. "That's not our style, we're partners in this with 3G," Buffett said, while adding “ "I have no intention of selling and no intention of buying." Berkshire and Brazil-based private equity group 3G own a combined 50% in the food company.

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.