Berkshire Hathaway could sell nearly all of its KHC shares
Kraft Heinz Co (NASDAQ:KHC) stock is down 7% to trade at $22.07 at last check, following news that Berkshire Hathaway -- the company's biggest shareholder -- could sell nearly all of its shares. Also of note, the company was dealt a second downgrade within a week's period, with BNP Paribas Exane lowering its rating "under perform" from "neutral," along with a price-target cut to $22 from $24.
Today's drop has KHC trading at its lowest levels since the Covid-19 crash on March 16, 2020. Overhead pressure at the 60-day moving average has guided the shares lower for the past few months. Year over year, the equity is down 23.5%.
Calls have been much more popular than usual over the past 10 weeks, per KHC's 50-day call/put volume ratio of 11.42 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all other readings from the past year. An unwinding of some of this optimism could be keeping pressure on the shares.
Options are well-priced at the moment. KHC's Schaeffer's Volatility Index (SVI) of 26% stands higher than just 25% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.