Dow Shrugs Off Buffett’s Big Buy: H.J. Heinz Company (HNZ)

Warren BuffettWith two major deals stealing the day’s headlines, the Dow Jones Industrial Average finished essentially flat, down 10 points, or 0.07%, just a few points below 14,000. Initial employment claims dropped to 341,000, from 368,000 the week before, and came in well under expectations of 365,000. Continuing unemployment claims also improved significantly, indicating further improvement in the job market.

Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) surprised the market this morning, announcing it would buy H.J. Heinz Company (NYSE:HNZ) for $23 billion, sharing ownership with 3G Capital. The price tag of $72.50/share represents a 20% premium over Heinz’s closing price on Wednesday, at $60.48. The company synonymous with ketchup would seem to be a perfect fit for Buffett, who prefers to invest in brand names with boring business models such as Fruit of the Loom and The Coca-Cola Company (NYSE:KO). The world’s richest investor has said he’s fond of businesses that could be run by a “ham sandwich.” Considering that, the purchase of the condiment giant would seem to be a perfect extension of that philosophy. Berkshire shares finished up 1.3%, while Heinz gained 19.9%.

The other deal today was the merger between US Airways Group, Inc. (NYSE:LCC) and American Airlines, valued at $11 billion, and was widely anticipated. The two companies will combine to form the world’s largest airline, and shares of American-parent AMR jumped 63% on the news, as shareholders may get a piece of the new company despite American’s bankruptcy. US Airways shares dropped 4.6%.

Despite the Dow’s flat performance, the market is generally enthused by M&A activity, which seems to be picking up, as today’s events constitute three major deals in just a matter of weeks, including the Dell Inc. (NASDAQ:DELL) buyout earlier this year.

After hours, Herbalife Ltd. (NYSE:HLF) was making noise again, gaining 24%, after activist investor Carl Icahn disclosed a 13% stake in the nutritional supplement maker. Herbalife shares have gotten rocked back and forth since hedge fund manager Bill Ackman revealed a large short position in December, and called the multi-level marketing company a “pyramid scheme.” Shares have nearly doubled since bottoming after Ackman presented his case for shorting the stock.

The article Dow Shrugs Off Buffett’s Big Buy originally appeared on Fool.com and is written by Jeremy Bowman.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway and H.J. Heinz Company. The Motley Fool owns shares of Berkshire Hathaway and has the following options: Long Jan 2014 $50 Calls on Herbalife Ltd..

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!