Buffett said he overpaid for Kraft. What he said was more precise.
Buffett said the business uses about $7 billion in tangible assets, while Berkshire paid roughly $100 billion in total asset value. Then came a $15.4 billion goodwill impairment. Ask what the price assumes.
Transcript
In February 2019, Warren Buffett said it plainly: we overpaid for Kraft.
That line became the story: a famous investor paid too much. The record shows he said something more precise.
In 2015, Heinz merged with Kraft Foods Group. Berkshire Hathaway and 3G Capital put in an additional $10 billion to fund a special dividend to Kraft shareholders.
Buffett's point was narrower than overpaying. He said the business uses about $7 billion in tangible assets, while Berkshire paid roughly $100 billion in total asset value. The price for Kraft assumed earnings power it did not have, resting almost entirely on goodwill.
In the fourth quarter of 2018, Kraft Heinz took a $15.4 billion goodwill impairment. Kraft Heinz stock fell more than 27% in a day, and Berkshire recorded a $3 billion write-down.
So overpaid is too vague to learn from. The useful question is what the price assumed. By September 2025, Berkshire's 27.5% stake, which cost $9.8 billion, was worth about $8.9 billion. Before you pay for goodwill, write down the earnings it assumes, and check them every year.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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