NEW YORK Kraft Foods Inc KFT.N shares rose on Friday after Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) revealed it had taken an 8.6 percent stake, making it by far the foodmaker's largest shareholder.
Shares of Kraft were up $1.69, or 5.8 percent, at $31.00 in morning trading on the New York Stock Exchange.
In a regulatory filing on Thursday, Berkshire said it owned 132.4 million shares of Kraft as of Dec 31, worth $4.32 billion at the time.
Berkshire had accumulated more than half of the stake by last June 30, but had not previously disclosed its investment. Regulators sometimes let Berkshire delay disclosing its purchases so that investors can't try to copy Buffett, often called the world's greatest investor, until he's done buying.
Analysts said Northfield, Illinois-based Kraft reflects Buffett's preference for brand-name companies with solid businesses, but which may be out of favor.
Kraft products include Maxwell House coffee, Oreo cookies and Oscar Mayer deli, and its namesake cheese. The former unit of Altria Group Inc (MO.N) went public in June 2001 at $31 per share.
"This is a company with leading, high-quality brands with depressed margins," said Matt Arnold, an analyst at Edward Jones. "(It) offers significant value if management can restore profitability and drive the top line with product innovation."
Kraft posted a 6 percent decline in fourth-quarter profit on January 30, as a more than 40 percent jump in dairy costs offset an 11 percent increase in sales. The company gets nearly one-fifth of its revenue from cheese.
The Berkshire stake in Kraft is more than twice as large as that of State Street Global Advisors, the next-largest shareholder, according to Thomson ShareWatch.
Berkshire, based in Omaha, Nebraska, also owns large stakes in other consumer products companies, including Coca-Cola Co (KO.N) and Procter & Gamble Co (PG.N).
In Thursday's filing, Berkshire also revealed a $76.1 million stake in GlaxoSmithKline Plc (GSK.L) (GSK.N), Europe's largest drugmaker.
That followed investments in several health-care companies over the last year, including drugmakers Johnson & Johnson (JNJ.N) and Sanofi-Aventis SA (SASY.PA) and the insurers UnitedHealth Group Inc (UNH.N) and WellPoint Inc WLP.N.
Buffett, worth $52 billion according to Forbes magazine, has transformed Berkshire since 1965 from a failing textile company into a $221 billion conglomerate by acquiring out-of-favor companies with strong earnings and management and investing in stocks. Berkshire owns more than 70 companies.
(Additional reporting by Deena Beasley in Los Angeles; Editing by Dave Zimmerman)