Greg Abel's First Test: Can Berkshire Pull the Plug on Kraft Heinz?

Under the leadership of Greg Abel, Berkshire Hathaway is weighing a significant portfolio pivot that could redefine Warren Buffett’s legacy in the food and beverage sector. The conglomerate is exploring an exit from its substantial stake in Kraft Heinz, signaling a potential shift in investment strategy under the new CEO. This potential move would mark a watershed moment—not just for Berkshire, but for understanding how Greg Abel intends to reshape the company’s capital allocation priorities in 2026 and beyond.

From Buffett’s Legacy to Abel’s Strategic Crossroads

The journey began with optimism in 2015 when Buffett partnered with 3G Capital to orchestrate the merger of Kraft Foods and H.J. Heinz, birthing Kraft Heinz as a powerhouse in packaged foods. Berkshire’s 27.5% ownership stake made it the company’s largest shareholder, cementing Buffett’s confidence in the combined entity’s earnings potential. However, the investment has since encountered headwinds, forcing a critical reassessment.

Last September, Kraft Heinz announced plans to split into two independent, publicly traded companies through a tax-free spin-off—a move designed to streamline operations and clarify corporate focus. When the company subsequently flagged potential strategic transactions in May 2025, Berkshire responded decisively by writing down $3.76 billion against its Kraft Heinz holding. As of September 30, 2025, Berkshire’s remaining investment carried a value of $8.6 billion, underscoring both the scale of the position and the accumulated losses.

Greg Abel now stands at an inflection point. His decision to potentially divest represents not merely a financial choice but a signal about how aggressively he plans to prune underperforming legacy holdings and reallocate capital toward higher-return opportunities.

The Economics Behind the Potential Exit

Berkshire’s core investment philosophy targets businesses with durable earnings power, strong returns on equity, modest debt levels, and capable management teams—but only at sensible valuations. The deteriorating outlook for Kraft Heinz suggests that one or more of these criteria no longer align with current market conditions or the company’s operational performance.

The $3.76 billion write-down in 2025 already reflected management’s reassessment of fair value. A full exit would crystallize remaining losses while freeing up capital for deployment elsewhere. For Greg Abel, the move would demonstrate that no investment—regardless of Buffett’s historical involvement—is sacred if fundamentals deteriorate.

How Rivals Are Handling Portfolio Strategy Differently

The acquisition playbooks of Berkshire’s peer institutions provide useful context. Progressive Corporation focuses its M&A activities on building scale, technology, and distribution channels while reinforcing its insurance portfolio. The company pursues disciplined, selective acquisitions that deliver clear strategic value and complement existing strengths.

Travelers Companies adopts a similar philosophy but with emphasis on expanding underwriting capabilities and technology infrastructure alongside core insurance operations. Both competitors demonstrate commitment to sustainable shareholder value through conservative balance sheet management and rigorous opportunity evaluation.

Under Greg Abel’s watch, Berkshire must decide whether maintaining its Kraft Heinz position—despite historical attachment—aligns with these industry best practices or whether reallocation represents the more disciplined path forward.

Valuation Red Flags and Market Positioning

Berkshire Hathaway trades at a price-to-book ratio of 1.49, sitting above the industry average of 1.42, suggesting premium valuation relative to peers. The stock carries a Value Score of C, indicating that valuation concerns remain present in the market’s assessment. Over a one-year horizon, BRK.B has appreciated 1.8%, a result that has outpaced industry benchmarks but reflects broader market strength rather than stellar fundamental performance.

Looking ahead, consensus estimates for first-quarter 2026 earnings per share remain unchanged from seven days prior. However, 2026 full-year EPS estimates have shifted 22% higher over the same period, suggesting growing optimism about earnings trajectory. Importantly, revenue forecasts point to year-over-year growth in 2026, while EPS projections hint at potential compression—a dynamic that could be addressed through disciplined capital allocation and strategic divestitures like a potential Kraft Heinz exit.

What’s Next for Greg Abel’s Capital Allocation Strategy

The current Zacks Rank of #4 (Sell) reflects skepticism in the near term, though such ratings can shift rapidly based on portfolio realignments. If Greg Abel does proceed with the Kraft Heinz divestiture, it would accomplish multiple objectives simultaneously: unlocking trapped capital, signaling managerial willingness to reassess historical decisions, and potentially strengthening per-share metrics through reduced earnings drag.

The question now centers not on whether Berkshire has the capacity to exit, but whether Greg Abel possesses the conviction to move beyond Buffett’s historical decisions and chart a new course for shareholder value. The coming months will reveal his answer.