Spinoff Could Put the Crunch Back Into Kraft

On the surface, in other words, it may seem as if Kraft has built a brilliant shelf lineup that includes perennial kid favorites such as Oscar Mayer wieners, Crystal Light and American cheese singles, but its executives actually deserve a big fat frowny face on their report card for the way those brands have been managed.

Free the Oreo!

The depth of Kraft's misfortune can be viewed better in the stock market than in the supermarket. In the past five years, shares of Kraft, which have traded separately from Altria since 2002, are basically flat, while shares of Kellogg are up 85%, Campbell Soup is up 50%, and the broad market is up 30%. Yecch! No wonder Altria wants to give this biz the old heave-ho.

Should you be a buyer? Well, when the fundamental results of a famous business become so bad that its parent decides to kick it out of the house, the contrarian in you should smell opportunity. And in this case, you should pay heed, because when those new Kraft shares come on the market in the spring, they're almost certainly going to start life by crumbling like a stale biscuit. But be ready to pounce, perhaps a few weeks later around the $31 level, because they should then recover and begin a binge of appreciation.

The reason: Liberty has its advantages. The slogan "Free the Oreo!" might not have the same ring to it as "Free Tibet!" but the concept is the same. A company like Kraft should do much better as an independent entity than as a cog in a giant machine.