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Berkshire Hathaway Chairman Warren Buffett has defended 3G’s management of Kraft Heinz.SCOTT MORGAN/Reuters

Warren Buffett on Saturday signalled his commitment to Kraft Heinz Co. and defended his actions toward Wells Fargo & Co., two of the largest investments at his Berkshire Hathaway Inc., despite mistakes at both that have caused many investors to sour on them.

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Mr. Buffett, 88, spoke before tens of thousands of people in Omaha, Neb., where the Berkshire chairman and chief executive and vice-chairman Charlie Munger, 95, fielded more than 50 shareholder and analyst questions for six hours at the centrepiece of a weekend of events.

Kraft Heinz has been a thorn for Berkshire, which in February took a US$3-billion writedown on its 26.7-per-cent stake, because of the packaged food company’s inability to keep up with changing consumer tastes and reliance on older brands such as Oscar Mayer and Jell-O.

The company was created from the 2015 merger of Kraft Foods and H.J. Heinz, the latter of which had been owned by Berkshire and Brazil’s 3G Capital, which runs Kraft Heinz day to day.

Mr. Buffett defended 3G’s management, saying the combined company is doing well operationally, and that its current problems cannot be blamed on a lack of investment.

But he also maintained that “we paid too much money” for Kraft.

“You can turn any investment into a bad deal by paying too much,” he said, while adding it was “not inconceivable” Berkshire could partner with 3G again on a transaction.

He said 3G had more willingness to take on leverage and “pay up,” but in many cases also had “way better operators.”

Mr. Buffett, who became famous in 1991 for criticizing Salomon Inc.’s practices and becoming interim chairman to right the mess, also faced a question about his relative silence about Wells Fargo, in which Berkshire owns a nearly 10-per-cent stake.

Wells Fargo has spent more than 2½ years addressing fallout from mistreating its customers, including by creating fake accounts, losing two chief executives in the process, including Tim Sloan in March.

Mr. Buffett repeated that Wells Fargo “made some big mistakes” in its sales practices, and that “when you find a problem, you have to do something about it.” He also said chief executives who make big mistakes shouldn’t walk away with their wealth.

But many questionable Wells Fargo practices long predated Mr. Sloan’s becoming CEO, and Mr. Buffett and Mr. Munger have defended him.

“I don’t think people ought to go to jail for honest errors of judgment,” Mr. Munger said, calling Mr. Sloan an “accidental casualty.”


Berkshire also reported on Saturday that operating income, a measure of Berkshire’s business performance, rose 5 per cent, helped by the Geico auto insurer and BNSF railroad, although it fell just shy of analyst forecasts.

Results excluded Kraft Heinz because that company has not released its own quarterly results, Mr. Buffett said.

Berkshire also repurchased US$1.7-billion of stock, reflecting Mr. Buffett’s difficulty in finding better uses for the company’s US$114.2-billion cash hoard.

Mr. Buffett acknowledged he would be willing to repurchase US$100-billion of stock if it became cheap enough, and Mr. Munger predicted Berkshire would become “more liberal” with buybacks.

“This much cash is certainly a drag” for Mr. Buffett, said Trip Miller, managing partner of Gullane Capital Partners LLC in Memphis, Tenn. “He and Charlie are certainly open that they missed it on several great businesses for many years. The purchases of Apple and Amazon are a good sign.”

Berkshire owns more than US$50-billion of Apple Inc. stock, and Mr. Buffett said two of Berkshire’s portfolio managers, Todd Combs and Ted Weschler, have invested in Inc.

Mr. Munger also lamented Berkshire’s failure to invest in Google, now part of Alphabet Inc., saying “I feel like a horse’s ass for not identifying Google earlier.”

Berkshire’s more than 90 businesses and roughly 389,000 employees make the company a barometer for the U.S. economy, and a report card for one of the world’s most revered investors.

Daphne Kalir-Starr, 9, a fourth-grader from New York City, lined up with her father at 11 p.m. on Friday night, along with her sleeping bag. It’s her third time to see Mr. Buffett.

“I really like hearing from great investors,” she said. “Even though he wasn’t really recognized at the beginning, he kept working at it.”

Bela Chowdhury, 49, came from Kolkata, India, with other students from a non-profit group that promotes financial literacy for women. “He is the ultimate guru,” she said.

Meanwhile, Luke On, a University of Toronto finance undergraduate, said he lined up at 10 p.m. on Friday.

“I have no place to stay and wanted to save money, but I wanted to see Warren and Charlie,” he said.

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