Warren Buffett Makes Another Chess Move

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Transcript:

[00:00:04] Douglas: So we’ve got new news out of, Omaha. Warren Buffet has made another chess move. What’s, what’s happening?

[00:00:12] Lee Jackson: Well, you know, back in 2015 or 14 when all of this came out, when Kraft and Heinz merged back then, you know, buffet was a big, a big advocate for that. Buffet and there was there and there was another either private equity or hedge fund that was involved as well. But it just, for the first couple of years it went really good and then it has just gone nowhere since.

[00:00:37] Lee Jackson: And I think the inevitable has happened. And Kraft Heinz, although they haven’t really said yet, this has definitely, but they started leaking this back in May, that it looks like they’re gonna split up the company.

[00:00:49] Douglas: Yeah, that’s all that. I always love it. Let’s merge the, you remember when Altria (NYSE: MO), like it was tobacco, didn’t Altria own craft at one point.

[00:01:00] Lee Jackson: they owned a chunk of it at one point and they jettisoned it.

[00:01:04] Douglas: interest and now they own part of Anheuser. You’re right, you take

[00:01:08] Lee Jackson: Yeah.

[00:01:09] Douglas: you mash ’em together. it doesn’t work, you break ’em up again.

[00:01:13] Lee Jackson: Well, yeah, and, and the thing about it, you know, the grocery store business, I mean, and from what I’m hearing, the one of the companies will be, you know, the strictly low margin grocery store stuff. And then the, one of the other divisions will be like the part that that really, really works. You know, the Ketchup and condiments part and grape poon. And, but apparently also included that, that would be the mac and cheese and, and you know, some of those items will be in that segment and then the other segment will hold everything else, including Oscar Meyer. So, you know, it is just ridiculous. And, and, and once again, it’ll be interesting to see what Warren Buffet does here.

[00:01:57] Lee Jackson: Does he hold, does he j Jet jettison all his holdings? ’cause he, he has a huge position in Kraft Heinz. I think he owns 20% of the outstanding shares, something like that. but if he, if he sells all his stock when they do the split, whoa. Oh, that wouldn’t be good.

[00:02:16] Douglas: It’s like when GM (NYSE: GM) bought EDS. So yeah, I mean you got, you start to get these things where the CEOs and boards say, this is the great strategic move. And a few years later they just say, let’s just untie the whole thing. So look, it could be our theory. You and I have a theory, you usually works. You got two companies there. Really should be separate. You break ’em

[00:02:39] Lee Jackson: Oh, absolutely.

[00:02:40] Douglas: a sudden the shareholders get some unlocked value and they make more money. I, I like the stock right now because, you know, in a breakup, the thing, you know, if I get two, three different companies, I think I’m

[00:02:56] Lee Jackson: Sure. As we’ve discussed with a, a zillion other breakups that are possible Google (NASDAQ: GOOG), you know, and, and other, other ones, when this does happen. and it could be two companies, I think. I think it’s possible it could even be three. So, it’ll be interesting to see what Buffet’s move is on this. ’cause he’s been a strong supporter and he’s been in since the beginning since.

[00:03:20] Lee Jackson: 14 or 15 whenever it was. And the stock has just been dreadful. And now for, for, and we’ve touted the stock, if nothing else, maybe a value trap, but it paying the kind of dividend it was paying, which is supported by a ton of earnings power, you know, it was a good idea for value type buyers and those seeking income, but it’ll be very interesting to see what Buffet’s move is.

[00:03:47] Lee Jackson: If they do indeed announce to do it, and I’m sure they have to go to him for some sort of asset approval.

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