Altria Group (NYSE:MO) shares rose today after the tobacco industry's legal picture became a bit clearer. The judge in the government's racketeering lawsuit stated the tobacco companies were deceiving the public, however, there were no significant fines attached to the ruling. Any other stipulations found in the 1600 page ruling will likely be appealed in the appelate courts. The judgement clears the way for Altria to spin-off its 88% stake in Kraft Foods (NYSE:KFT), which moved down on the news. The timetable for this action is likely to be between 10 and 14 weeks.

Spinoffs present an interesting opportunity for investors. When Altria spins off its stake in Kraft, it will distribute its 88% stake in Kraft to its own shareholders. Typically, a significant portion of these shareholders will sell their shares of Kraft because they are only interested in Altria. Many larger funds that acquire a large number of shares may also not want to hold Kraft. This results in selling pressure that has nothing to do with the underlying value of Kraft Foods. Even more, Kraft has an existing float that is being publicly traded. Some of these investors may sell off their shares in anticipation of this selling, which could result in a windfall. When and if this occurs, there will be many cheap shares available on the market for enterprising investors! The key to seeing if any of this will happen is watching Altria Group's SEC filings, particularly their Form 10.

Many people are also very bullish on the tobacco sector in general. This announcement should allow investors to remove the majority of the risk premium that was associated with this lawsuit, which should result in an increased share price. Many analysts are calling for $95 - $100 per share.