Kraft rises after Buffett reveals stake

By Jonathan Stempel

NEW YORK (Reuters) - Kraft Foods Inc (KFT.N: Quote, Profile, Research, Stock Buzz) shares rose on Friday after Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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.