Kraft Foods
(NYSE:KFT) is now home to yet another famous investor as Warren Buffet
joins the ranks of famed activist investors Carl Icahn and Nelson Peltz
who have already built up sizable stakes in the company. Shareholders
are hoping that the involvement of all these famed investors will
result in extraordinary gains.
It is unclear whether Buffet, who
owns less than 5 percent of the company, will side with the two
activists in their plans for the company. Icahn and Peltz proposed a
divesture of key brands in an effort to provide quicker returns for
shareholders. There is speculation that they could face some problems
with Buffet, however, given his track record of investing in companies
undergoing a restructuring brands internally - he might be siding with
management.
Many others insist that Buffet may simply be
interested in the prospects of the spin-off combined with a strong
brand. Historically, spin-offs have tended to outperform the larger
market in their first few years as an independent company, especially
when the company possessed a leading brand. Clearly, Kraft is a great
fit for this type of strategy and so far the company's shares are up
over 11% since the spin-off was completed last March.
In the
end, this is definitely a unique situation given the involvement of so
many famous investors that may even be on opposing ends of the spectrum
when it comes to plans for the company's brands generating poor
operating results. Combined, these factors make KFT a stock that is
definitely
worth watching!
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