Summary
- Kraft Heinz's recent $15.4 billion write-down shows that Kraft is the problem. In-store research shows that Kraft is still being out-played by competitors.
- The accounting standard for writing down intangibles allows a large amount of latitude. The SEC knows this and is probing the company's actual methodology.
- Kraft Heinz has not reported any cash flow statements for 3/4ths of a year. There is no way to judge how easily Kraft-Heinz can afford the dividend.
- Nevertheless, its stock price now seems to assume further write-downs and dividend cuts. Wait for a further margin of safety to open up.
What We Don't Know About The Kraft Heinz Company's (KHC) Free Fall
After Seeking Alpha published my article "Kraft Heinz Has Some Major Issues. Do Not Buy It," on May 7, 2019, KHC's stock slipped from $32.17 to $27.65 on Friday, May 31, 2019, or 14% in less than one month. My article argued that the stock's value is $26.83 per share. I decided to look further into the specifics of KHC's $15.4 billion write-downs and the subsequent delay in its issue of the 2018 10-K and the Q1 2019 filings with the SEC. I wanted to see what is available to know about this and its significance. I came up with a list of what is not known about KHC, that would normally be known. Then I decided to figure out what could be known, that would not normally be known. This article shows the results of my further investigation.
