Summary
- The massive write-down of Kraft Heinz assets produced a massive loss for the fourth quarter and for 2018 as a whole, erasing about a third of company's market cap.
- For investors stuck with the loss, it makes little sense to sell now after the flush-out of bad news, because the damage is already done.
- For myself, I still see decent odds of my trade turning positive within five years, but gains will be well bellow my initial expectations.
I thought that with a decline of nearly 50% in its stock value from its peak, the bottom had to be near. Sales volumes remained steady, with a slight increase experienced on a regular and steady basis. Profitability has been on a declining path, but I figured the trend will end, and there was a decent dividend to be enjoyed while one waited, so I bought some stock late last year. But now Kraft Heinz (KHC) came out with awful news in its fourth quarter report. A $15 billion write-down of assets, leading to a quarterly loss of $12.7 billion. A severe cut in the dividend, meant to shore up the company's finances. There is also the SEC investigation, which could inflict more pain on investors going forward. Kraft Heinz bit the bullet and it makes investors feel like they should too and take their loss and get out. Personally, I intend to stay, even though I clearly picked a horrible entry point. Looking beyond the current carnage, there is still a good chance that my trade will turn positive in coming years. It will just take a lot of patience, and it will by no means lead to spectacular gains.
