Berkshire Hathaway’s Warren Buffett sits down with CNBC’s Becky Quick to discuss the breaking news out of one of Berkshire‘s holdings Kraft Heinz.
Buffett on Kraft Heinz restating earnings: The company has my confidence
Modern Day Asset Management
ValueWalk's Raul Panganiban interviews Ross Klein, CFA, and Vince Lorusso. Ross is founder and CIO at Changebridge Capital and Vince is Partner and Portfolio Manager at Changebridge Capital where they manage the CBLS, Changebridge Capital Long/ Short Equity ETF and CBSE, Changebridge Sustainable Equity ETF. The following transcript is computer generated and may contain some Read More
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Welcome back everybody. We are here and news is breaking there's just an FCC filing that came out from Kraft Heinz. That's obviously a big Berkshire Hathaway holding Kraft high and says that it will restate earnings for 2016 and 2017 due to misstatements in the original filings. It does not however believe that the misstatements are what they call quantitatively material to any individual reporting period. It says that the impact on adjusted earnings is expected to be less than 2 percent for each year. Kraft Hines says that it has now completed an investigation that shows several employees and its procurement operation engaged in misconduct. But none of those were members of senior management. Our guest today again is Warren Buffett. He's the chairman of Berkshire Hathaway which owns a major portion of Kraft Hines and Warren what do you think of this. This news just hitting while we're sitting here.
Well more or less what I've heard. I'm not on the board anymore but. But Greg Bolan for a bit cooler on. So I've heard from them. And this is an update that I heard last night. And they can't they can't issue the first quarter reports until the 10k is filed and they can't file the 10k till Pricewaterhouse signs off on it and. And that apparently is going to require a restatement of a few years. And we could not report any earnings from Kraft Heinz in the first quarter because. If we get a dividend from Bank of America that dividend goes into earnings but because we have. Over 20 percent of Kraft times we don't report report the dividends we report the earnings. So we received a dividend of about one hundred and thirty million in the first quarter but that we don't report that at the. End we expected to get the earnings before we issued our own report. But when the time came to issue our report and we didn't have anything we just we put a zero in there and explained it in our release Saturday. And this is a further. Indication of the facts as they stand now. At some point the price Waterhouse will need to be happy with the figures they're reporting and that evidently involves a restatement. And at that time my guess is the quarterly figures become quite current and that we keep picking up our share of the earnings.
I mean this has been a long standoff period between TWC and the company if they've missed the deadline to get the numbers to you at that point.
What we did we didn't expect it. I thought that we would have the earnings on a dime. And Kraft announced earnings for last year. But they had not been signed off on by their auditors. So what they released them publicly they couldn't file the 10k with the S.E.C. subsequently. That's not unusual for companies to announce the earnings before they've actually got the sign off.
But in any event it's just you know with all we're going to get them this week or next week whatever it might be.
And and then last Saturday came and that's our time. But we've seen quarterly earnings we did not have and so we stuck nothing in there and then a footnote and we put in our press release as well that we just didn't have the figures.
If they're restating their earnings does that mean Berkshire Hathaway will also have to restate its earnings.
No but it would. It would be so immaterial by the time you take just our share or a much larger company so. That. I don't know exactly what we do when we get if it gets into the second quarter. I don't want to pick up two quarters and one quarter exactly how that works.
They said that this is the they've wrapped up this investigation. Are you satisfied with what you've heard from that part of the investigation or do you know that. I don't know about that.
I do know that because I've been I've been kept abreast of some of the things. I don't listen in on directors calls or anything like that but. But Greg tells me it was the high points of what were the low points of what's happened and that we have a terrific head of the auto company Jack Pope who's an independent director. He knows that sort of thing at the end he's put in the hours on it. So I feel very good about about the fact that Jack is is it he's really in charge of things from the standpoint of the directors as the company have your confidence.
The company has been competence. You had talked about it over the weekend where you said that.