What Does 3G Capital Teach Us About Reality?

Last March, Charlie Munger was asked about Berkshire Hathaway’s partnership with 3G Capital that has resulted in an unspecified number (estimated to be in the 4,000-8,000 range) of jobs that have been terminated as a result of 3G operators taking the helm of the combinated Kraft and Heinz. Munger responded: “What’s interesting about 3G is that they’re teaching us something about reality.” Munger didn’t offer a detailed elaboration. This begs the obvious follow-up: What’s the lesson on reality we are supposed to take from this?

In my view, there are five things–two good, three bad–that 3G is teaching us about the 21st century large-cap food sector.

First, the good:

The rise of 3G lets shareholders reap the benefits of wealth creation that previously stood unexploited. Usually, M&A activity, activist investing, and shareholder agitation are most prominent in industries that are subject to market demand changes or regulatory changes. Look at … Read the rest of this article!