Why is Daniel Loeb Buying Into Kraft?
Not content to simply keep himself busy with a Yahoo! (YHOO) turnaround, Daniel Loeb is turning to Kraft (KFT). Reuters reports that the hedge funder running $8.7 billion at Third Point made Kraft his fifth-largest position as of July 31, replacing Chesapeake Energy (CHK).
Assuming he’s long the stock, as other reports indicate he is, he’s not the first bull. Warren Buffet at Berkshire Hathaway, William Ackman at Pershing Square, and Nelson Peltz at Trian Fund Management have all owned the stock at times, says Reuters.
So what’s there to like? YCharts Pro considers the stock overvalued:
Its revenue growth is falling:
It’s possible he likes its cash flow picture:
Or it could be a play on the stock’s coming split. Kraft is spinning off the snacks business from the more attractive grocery side. The market seems to think this could unlock value, although a Wall Street Journal story pointed out it will cost a year’s worth of dividends.