Although 3G Capital Sells Down Its Stake, We Still See Opportunity in Kraft Heinz's Shares

Kraft Heinz disclosed May 26 that 3G Capital (it second-largest stockholder next to wide-moat Berkshire Hathaway, which maintains around a 25% stake) has distributed about half of its shares to external investors in its funds, leaving it with an 8% position. This news doesn’t shake our stance regarding the prudence of the firm’s current strategic playbook—anchored in pursuing lasting efficiencies, elevating research, development, and marketing spending, enhancing its category and e-commerce capabilities. As well, it leverages its scale to more nimbly respond to changing market conditions and its financial prospects (2% average annual sales growth against operating margins holding in the low-20s). As such, we aren’t wavering on our $51 fair value estimate.