Why 'Smart Money' May Have Exited Kraft

NEW YORK (TheStreet) -- So the details are now in. On Tuesday, the board of directors of Kraft Foods (KFT), the world's second-largest food company with trailing 12-month revenue of $54.4 billion, released more information about its plans to spin off its North American grocery business.

The board announced that the new company, Kraft Foods Group, will formally come into existence on Oct. 1. Beginning on Oct. 2, Kraft Foods Group will trade on Nasdaq under the ticker symbol "KRFT." Kraft Foods Inc. will change its name to Mondelez International and its ticker symbol to "MDLZ." The current ticker symbol, "KFT," will be retired.

Both Kraft Foods Group and Mondelez International plan to host investor events in early September. The company said it will announce details about these events by mid-August. It will certainly take time for the investment community to digest all these changes and what they suggest.

The company first said it would divide the company in its Aug. 2 news release announcing quarterly earnings results. It put a positive spin on a somewhat controversial spin-off.

So why did Pershing Square Capital Management's Bill Ackman sell his entire 15-million-share holding of KFT at the end of the first quarter? We also now know that Warren Buffett's company, Berkshire Hathaway (BRK-A), also sold 25% of its stake in Kraft around the same time.

According to a story in the Wall Street Journal Pershing Square Capital Management has acquired a 21.8-million-share position in Procter & Gamble (PG) and call options on an additional 8.3 million shares. That may help explain why Ackman's firm checked out of Kraft and raised lots of cash months ago.

At P&G's share price of $66.73 as of the close Tuesday, Ackman's position was worth close to $1.5 billion. No one seems to know why he is accumulating so many shares of PG, which has a market cap of nearly $188 billion.

It has been rumored that he is interested in meeting with P&G Chairman Bob McDonald. Whether he'll have that opportunity, no one knows for sure. Activists like Ackman often use their ownership clout to push for changes in companies, whether in leadership, direction or both.

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