Kraft Frenzy Begins as Shares Open Above Offering Price - TheStreet

Kraft Foods (KFT) was the Big Cheese on Wall Street this morning, as the food company's $8.7 billion IPO climbed above its offering price and attracted a frenzy of activity.

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In midmorning trading, shares of Kraft were up 28 cents, or 0.9%, to $31.28, hovering above the $31 price, which was the high end of the range. The stock was the most actively traded stock on the

New York Stock Exchange, with 34.7 million shares trading hands. Kraft opened for trading at $31.50.

The company, which priced its initial public offering of 280 million shares on Tuesday, saw its stock rise 2% in the first half-hour before slowly starting to pull back. The high for the session has been $32.

Yesterday's pricing, which was on the high end of the latest expected range, ranked as the second-largest IPO in U.S. history and raised $8.7 billion for the food company.

Philip Morris

(MO) - Get Report

, the parent company of Kraft, sold about 16% of its interest to the public and will retain the remaining 84%.

"Its up a little bit but not very much, which I think is pretty rational for the market," said David Kathman, a stock analyst with

Morningstar

. The analyst said he wasn't surprised that the stock price didn't run sharply higher because of the level at which the IPO priced. "Its at the high end of what I would feel comfortable paying for the stock and what I think a lot of other people would pay too. If it had gone up $5 bucks, I think it would have been too expensive". Kathman said he was expecting "some sort of little pop" in the stock initially. "Cooler heads are prevailing. People are being pretty rational and not paying any price for it."

Kathman said he expects the shares to stay in a narrow trading range in the very near term, but he said the stock is much more of a long-term play. "I don't expect it to do too much either way," he said. "I don't expect it to ramp way up. If it was going to do that it would have done it."