Kraft Foods, which has been targeted by activist-investors seeking faster change at the food giant, can add another big name to its shareholder list. The Wall Street Journal reports that Berkshire Hathaway, the investment vehicle of guru Warren Buffett, has acquired a stake of less than 5% in the company, citing a person familiar with the purchase. Veteran raiders Carl Icahn and Nelson Peltz already have holdings in the company. Kraft's German shares rose to the equivalent of $35.42 in Frankfurt, 1.7% above Wednesday's NYSE close. The source indicated that the Berkshire purchase predated news of Peltz's position last month. It was unclear, however, the Journal said, whether Buffett, traditionally a value investor, sides with the activists, or whether Buffett's history of investing in value companies with strong brands may have given Kraft a vote of confidence. Buffett declined to comment as did representatives of Kraft and Peltz. Kraft shares are up 11% since their March 30 spin-off from tobacco giant Altria but are down 1% this year. They gained 3.1% on July 13 when the Journal reported that Icahn had taken a stake in the company. It's unclear how big a stake Icahn owns, and he apparently isn't pressing as hard for change at Kraft as he is at some of his other holdings, the Journal said. Peltz, who owns a 3% stake, is calling on the company to sell its Maxwell House coffee and Post cereals businesses and to use the proceeds to buy back shares, the Journal said. Kraft says it is looking to increase value by increasing marketing spending and making a push overseas, not by selling off existing brands.
Sources: Wall Street Journal, Bloomberg
Commentary: Kraft Foods Shares Rise On Reports of Icahn Stake, Peltz Meeting • Kraft Foods May Go On a Value-Creating Acquisition Spree
Stocks/ETFs to watch: KFT, BRK.A, MO
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