Earlier today, the Street was abuzz with rumors that Kraft Foods (NYSE: KFT) was investigating the sale of brands such as Maxwell House and Oscar Mayer in order to raise capital to up its Cadbury (NYSE: CBY) bid to something a little bit sweeter (and one the confectionery giant might not reject).

Kraft responded to the rumors saying they were just that - unfounded conjecture - and noted that it would not in fact need to ditch hot dogs and coffee for creme eggs and Trident gum. A spokeswoman for the company told Reuters "The financing for this proposal does not require any divestitures." So where did these rumors get started, anyway? Is Kraft protesting too much?

Billionaire investor Nelson Peltz has acquired 3% of Kraft (NYSE: KFT) and will ask the company to sell Post Cereals and the Maxwell House coffee brand, according to a source.

Mr. Peltz has risen to number 278 on the Forbes list as one of the kings of the leveraged buyout business and, like Carl Icahn, has transformed himself into an activist investor, using proxy battles or the threat of proxy battles, to force companies to unlock value for shareholders.

One of his biggest coups was paying $300 million for Snapple in 1997 and flipping it three years later for five times that. More recently, he purchased a stake in Heinz (NYSE: HNZ), and pushed the company to cut costs, sell assets, and refocus on its core ketchup business.

Peltz's business savvy and large stake in the company make this great news for the company's investors. The stock soared yesterday after CNBC's David Faber reported that Peltz was targeting the company, and Goldman Sachs upped the stock from Sell to Neutral on the news and restructuring speculation.

While it's probably not a good idea to buy a stock just because an investment legend has, you could probably do a lot worse than following Peltz into Kraft. The shares have been stuck in a trading range for years now, and Peltz may just be the catalyst to help the company break out.