Warren Buffett spun riches out of chocolate, was burned by Kraft Heinz

Kraft Heinz used to get a pass from investors, who bought shares expecting it to find growth through dealmaking and cost-cutting. But as dealmaking has slowed and cost-cutting has run dry, its investors are punishing it for finding itself no better than its peers.

Like all major food companies, it is now stuck in the precarious position of battling low growth and rising costs in the public eye. Making any demonstrable change in brand and portfolio to appeal to today’s consumers will likely come at the expense of quarterly earnings, thereby reaping immediate punishment.

Mars, meantime, is entirely owned by the Mars family, who has run its $35 billion business for the long-haul. Without investor scrutiny, Mars made long-term investments in its chocolate business, like spending $100 million on the capacity to make caramel M&Ms. It also made changes for its future, paying $9 billion for animal hospital company VCA as Mars as eyes a firmer hold of the growing pet industry.

The contrast between a company for the long-term rather than short is one with which Buffett is intimately familiar. Buffett, an opponent of quarterly earnings guidance, took a swing at managing for the quarter in this year’s annual letter.

“Charlie and I have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an ‘innocent’ fudge in order to not disappoint ‘the Street’ – say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a ‘cookie-jar’ reserve – can become the first step toward full-fledged fraud.”

Indeed, Kraft Heinz revealed earlier this week it was the target of an U.S. Securities and Exchange Commission investigation into its “accounting policies, procedures, and internal controls.” It has said it is implementing certain measures to “mitigate” the risk of making the mistakes in the future.

Details around the nature and remedies surrounding the investigation are vague, and there is no evidence it is anything other than an honest mistake.

“We continue to cooperate fully with the SEC, and at this time the Company does not expect matters subject to the investigation to be material,” a Kraft spokesman said in a statement.

Still, not fully recording costs each quarter is one way companies have, in the past, helped boost their quarterly performance — and it could be the type of behavior Buffett has warned against.

He told investors at a 1995 shareholder meeting, that when investing “the most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle,” according to a clip found using CNBC’s Warren Buffett Archive.

There was a time when making blue boxes of Kraft Mac & Cheese dinner or hot dogs, promoted with their own iconic touring “Weinermobile,” seemed like the right fortress on which to stake a claim, but that may not be the case any longer.

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