Kraft Foods (NYSE:KFT) bowed to activist pressure last week by appointing two Peltz-approved directors to the company's board. The move follows pressure from the activist to spin-off the company's Post cereals and Maxwell House Coffee divisions to unlock shareholder value. Shares rose marginally on the news as shareholder are hoping that such initiatives now take hold.

Kraft reached an agreement to appoint two new directors to the company's board in exchange for a "standstill agreement" that prevents Peltz from publicly criticizing management or the growth strategy of the company for the next two years. The activist also gave up any rights to solicit proxies and agreed to vote for incumbent directors during the next election.

"We see the agreement as a pragmatic path forward for Kraft," said a spokeswoman. "Kraft adds two directors, Trian pledges support for our board, and the agreement clarifies our relationship with Trian."

Peltz has been targeting the food industries recently, targeting not only craft but also Cadbury Schwapps. The activist investor is known for sending whitepapers to the company documenting his reasoning for certain actions. And while his plans for Kraft were never made public, there was a lot of speculation that the plan called for a spin-off of two key business segments.

In the end, this is good news for shareholders as it means Peltz's plan will likely receive serious consideration. If implemented, we can assume that it will result in substantial value being unlocked for shareholders in the long-term. Combined, these factors make KFT a stock worth watching closely!

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Goldman Sachs (NYSE:GS) shares are up over five percent today after the investment banking firm announced that it does not expect to take any significant asset write-downs this quarter. The news also boosted confidence in other financial stocks around the market, including Bank of America. Many investors are hoping that this will signal the end of the credit crunch.

"We're convinced we have a pretty good grip on [CDO and mortgage] valuations," said Blankfein at the Merrill Lynch Banking & Financial Services Conference after some investors voiced concerns about Goldman's valuations. The CEO assured investors that it has properly valued its assets. In fact, when the firm isn't certain, it has traders execute test trades to assign a value that has some merit.

Interestingly, Goldman also has a bearish view on the US mortgage markets where rising default rates and a lack of buyers has caused steep declines in mortgage values and derivatives like CDOs. The firm reported solid gains on its bets against the mortgage markets and indicated its belief that things will likely get worse before they get any better.

In the end, it appears the Goldman made the correct bet on the mortgage markets by positioning itself as net short. Whether or not the firm's valuations are correct remains to be seen, but it appears that the only factor they fail to fully consider is liquidity (after all, test trades don't account for that). Combined, these factors make GS a stock worth watching!

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Kellwood Company (NYSE:KWD) shares are up nearly ten percent today after Sun Capital threatened to take its $544 million buyout offer to the company's shareholders unless the board would reconsider its offer. Shareholders are clearly hoping that the company will either accept the offer or the firm will bring a higher buyout offer on the table.

"Our strong performance is to acquire Kellwood in a friendly negotiated transaction, but we are prepared to take all the necessary steps to protect the value of our existing 9.9% ownership position in Kellwood, including making a $21-per-share offer directly to Kellwood's other shareholders," said Sun Capital in a letter to the board.

Since Sun Capital did not increase their buyout price at all, it is very unlikely that we will see a response from the company. The next step would therefore be a tender offer by Sun Capital during which they would offer to tender shares for cash at $21/share or a proxy contest in which they would bring the issue to vote at the company's next annual meeting.

Kellwood shares dropped to a 52-week low of $14.21 after reporting severely damaged earnings earlier this year. The first Sun Capital offer came in shortly after this occurred and shares are still down over 50 percent on the year. Ultimately, this means that many shareholders are underwater on their investments and may not be interested in selling if the company can present a compelling long-term value proposition.

In the end, it will be interesting to see what becomes of this situation. It is highly uncommon for a private equity firm to go through with a hostile tender, but it will likely be their only option. Combined, these factors make KWD a stock worth watching!

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