The shares of Tiffany & Co. (NYSE: TIF) are taking a beating today, down nearly 3% at last check. Traders are reacting to news that Trian Fund Management L.P., under the helm of billionaire investor Nelson Peltz, reduced its stake in TIF from 8.5% to 6.9%.

According to a filing with the Securities and Exchange Commission, Trian sold 2.25 million shares on Wednesday and Thursday at prices ranging from $22.58 to $22.61 per share. Now, the fund beneficially owns 8.49 million shares of TIF.

"With $37.2 billion in revenues in 2007, Kraft Foods (NYSE: KFT) is the largest food manufacturer in the U.S. and second-largest worldwide," notes leading turnaround stock expert George Putnam.

The editor of The Turnaround Letter explains, "New management has begun to shake things up and the turnaround program is well underway." Here's the advisor's review.

"The roots of some of Kraft's products reach all the way back to 1767, but it wasn't until 1903 that James L. Kraft started his wholesale cheese business from a horse drawn wagon in Chicago. Today, Kraft produces many of the best-known food brands in the world.

"In 1988, Philip Morris (renamed Altria) purchased Kraft, and in 2000 it integrated the purchase of Nabisco into Kraft. Altria sold a small stake to the public in 2001, but maintained majority control until 2007, when the company was completely spun off as an independent company once again.

"Under the Altria umbrella, Kraft stagnated, with declining revenues and little product innovation. As a result, the stock price today is within $1 of the price where it was when first sold to the public in mid-2001.

"New management has begun to shake things up at Kraft. In June 2006, veteran food executive Irene Rosenfeld became CEO, returning to Kraft from a stint at Pepsico running its Frito-Lay division.

Back in May, Nelson Peltz reported a stake of less than 1% in Starbucks Corporation (NASDAQ: SBUX), and the stock jumped 6% on the news.

I was skeptical: I wrote on BloggingBuyouts that "Most likely Peltz's stake is a non-issue and will lead to no changes. I certainly don't buy that it's a good reason for the stock to add more than half a billion dollars to its market cap in a single day."

Non-issue indeed. Today Peltz reported, in the latest 13-F for his Trian Fund that he has eliminated his stake in Starbucks. Somewhat hypocritically, the market sent shares of Starbucks up more than 3.5% today. Nelson buys? Buy, buy buy! Nelson sells? Buy, buy, buy!

We'll never know why Peltz dumped his stake in Starbucks but, given his track record, you have to think that something spooked him -- he doesn't normally hold stocks for a few months.

Peltz -- whatever his shortcomings -- knows the food service industry pretty well. Given that he just sold Starbucks, I'd think twice before buying.

"I've spotted an excellent opportunity to cash in on the turnaround of one of America's most visible companies -- Starbucks (NASDAQ: SBUX)," says Jim Stanton.

The quantitative analyst and contributing editor to Xcelerated Profits Report explains, "I've had my eye on a number of retail stocks for some time now, looking for signs of a potential turnaround, and Starbucks is now high on my list."

"One of the main reasons for the slide in SBUX shares from its high of $40 in November 2006 was the overly aggressive expansion plan.

"And as food and dairy prices have soared, this has led to higher operating costs. In turn, this forced Starbucks to raise prices, just as consumers were struggling from the housing slump and soaring inflation.

"And as competition from the likes of McDonalds and Dunkin Donuts has turned up the heat, Starbucks has suffered charges related to closing out unprofitable stores. But Starbucks is tackling the problems.

Today's trading action was interrupted and then switched gears late morning after two unrelated pieces of worrisome news. Most importantly, I'd argue, reports surfaced that a Navy contracted ship fired warning shots at two fast-approaching Iranian vessels. Iran denied any hostilities over the incident (it must have been 'Fauxranians'). Oil shot up $2.43 to $118.49 per barrel. Also, consumer sentiment from University of Michigan (revised) was reported at a 25-year low at around the same time.

These are the unofficial closing prices today for major US index readings:

• DJIA 12,892.84 (+43.89; +0.34%)
• S&P500 1,397.86 (+9.04; +0.65%)
• NASDAQ 2,422.93 (-5.99; -0.25%)
• 10YR-TBond 3.866% (+0.039)
• 52-WEEK LOWS (AAI, HRZ, IAR, LEE, NTGR, PAY, UCBH, VDSI)

Baidu.com Inc., (ADR) (NYSE: BIDU) was a big gainer on a mixed day after earnings. The company beat earnings last night and saw an upgrade from Citigroup this morning. Shares rose 6% to $363.00 in the last minutes of trading.

Wendy's (NYSE: WEN) finally sold the company to Nelson Peltz. The price which Peltz company Triarc paid was about $26.78 per share only a 6% premium according to the AP. One of the reasons the firm went for so little may be that there were no other buyers. The Wall Street Journal writes that "The move puts an end to the year-long saga that began when Wendy's first said it would consider a sale last April after Mr. Peltz began pressuring the chain."

Peltz has gotten a very good deal and Wendy's shareholders have not. The chain's current stock price is near its 52-week low. Over the last six months, the company's shares are down about 23% while rivals Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) are up about 5%. Of course, they are the market share leaders and deserve some premium for that.

But if fast food does well, especially in a poor economy when people cannot afford more expensive restaurants, Peltz will have picked up a prize. When a recovery comes around, Wendy's could become a very nice business and the billionaire will look like a genius.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• Wendy's International Inc (NYSE: WEN), struggling since the 2002 death of founder Dave Thomas, and pressed by investor Nelson Peltz to improve results, will today announce a deal with Peltz, the Wall Street Journal reported.
• The Wall Street Journal also reported that the House Financial Services Committee voted to approve $15B in loans and grants so that local governments can buy foreclosed homes throughout the U.S. Committee chairman Barney Frank said the bill will avoid abuse, including requiring that purchased homes be a minimum 60 days into the process.
• Adding to evidence of a rally in corporate credit markets, the Financial Times reported that Deutsche Bank AG (NYSE: DB) is preparing another big sell-off of its leveraged loans in Europe.

OTHER PAPERS:

• Several e-mails that have been obtained by the New York Post sent between Wall Street banks may prove a serious setback in the fight over the takeover Clear Channel Communications Inc (NYSE: CCU). The e-mails reportedly show the banks, led by Citigroup Incorporated (NYSE: C) and Deutsche Bank, looking to get out of financing the buyout by Bain Capital and THL Partners by offering terms "they know the [firms] won't be able to accept."

Nelson Peltz isn't too happy with Wendy's (NYSE: WEN), which quickly rejected two of his bids for the company, including a plan to combine Wendy's with Arby's, a fast-food chain owned by Triarc (NYSE: TRY), a company chaired by Mr. Peltz.

Normally I'm pretty sympathetic to the campaigns of activist investors, but Peltz has a pretty poor record on corporate governance. During his proxy fight with Heinz back in 2006, the company responded to his calls for change with this: "Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an 'F' on overall board effectiveness -- the lowest possible rating."

So it appears that Peltz may not be walking corporate governance talk. But then again, Wendy's has also been a prodigious destroyer of shareholder value of late, so this is kind of like trying to decide between leaving the kids with Britney or K-Fed.

With economic worries sending luxury goods makers like Coach Inc. (NYSE: COH) and Tiffany & Co. (NYSE: TIF) well off their highs, at least one super-investor who isn't afraid to go against the conventional wisdom is taking notice.

Nelson Peltz and his Trian funds have upped their stake in Tiffany from 5.6% to 7.9% amid continued weakness in the company's share price -- the stock is already down 20% year to date.

According to the Wall Street Journal [subscription], Peltz has previously said he isn't seeking a seat on the company's board, but wouldn't rule out the possibility of taking an activist stance somewhere down the road. Another big drop could prod him to step in and try to make something happen.

Tiffany recently reported a weak holiday sales period, a strong indication that the economic malaise that started in subprime may be carrying over to more upscale consumers. In recent years, Tiffany's and other luxury goods makers have seen their markets expand to include more luxury aspirational customers. Dependence on less wealthy consumers for sales growth may be making the luxury goods sector less immune to economic woes than it has been historically.

A fund affiliated with restaurant super-investor Nelson Peltz has acquired a 14% stake in Cheesecake Factory (NASDAQ: CAKE), sending shares of the dining chain up 10% on Wednesday.

The company said that it "has had a preliminary conversation with Triarc (Pelz's firm) already, and looks forward to continuing that dialogue."

According (subscription required) to the Wall Street Journal, "Mr. Peltz has bought stakes in several other restaurant and food companies, including Wendy's International Inc.(NYSE: WEN) and H.J. Heinz Co (NYSE: HNZ). At those companies, he has pressed directors and executives to sell brands, increase marketing or otherwise change their strategies in an effort to raise their stock prices. Mr. Peltz has said he prefers to work with existing management to effect change, though in the past his involvement has prompted reshuffling of company management and boards."

Cheesecake Factory has struggled to provide investors with strong returns over the past few years, and was scraping a multi-year low before the Petlz announcement sent the stock up.

Nelson Peltz is offering to buy Wendy's (NYSE:WEN), but no one seems to want to say for how much. According to TheStreet.com,"in a Securities and Exchange Commission filing Tuesday, Triarc (NYSE:TRY) said it submitted an offer Monday to buy all of Wendy's shares, primarily with cash."

Peltz had indicated that he thought Wendy's was worth between $37 and $41 a share when he started talking to the company in July. The shares now trade below $32, so investors should not expect much of a premium.

Douglas A. McIntyre is an editor at 247wallst.com.

Wendy's International (NYSE: WEN) may not see an auction-style sale after all. After months of speculation about the fate of the global burger flipper, the sale of the company may be on indefinite hold due to continued turmoil in the credit markets. What this means is that Wendy's will remain for sale after a short intermission. The length of that intermission may be six months or longer.

Although bids on the company are due today at 5:00 pm EST, the company may pull the rug out from under the bids it has received so far and put the sale of the company on hold. Activist investor Nelson Peltz, who said he has been interested in buying the company (and who pushed for a sale) will most likely
have to go home empty-handed today.

The problem is the financing provided by the banks servicing Wendy's at this time. Apparently, the conditions of such a sale by the chain's two largest bank creditors contain details that could leave a nasty taste in the mouth of bidders; a sales contract clause gives the two banks (JPMorgan and Lehman Brothers) the right to withdraw financing if the credit markets continue to deteriorate further. Without a crystal ball, who knows when or if that will happen. My guess: the credit market will sink further into 2008. Get ready to ride the wave.

What might be the best thing for a buyout mogul? How about a blank check?

Well, that's what Nelson Peltz is trying to get. That is, he has filed an offering for a blank check offering -- called Trian Acquisition -- that will have $750 million for M&A deals. Which ones? It's whatever Nelson wants.

Seems he has the pedigree to pull it off. Peltz got his start back in the roaring 1980s (with the help of Mike Milken). He also has lots of operational experience, being the CEO of Triarc. Oh, and he's been an effective shareholder activist, as seen with such plays as Heinz (NYSE: HNZ) and Wendy's (NYSE: WEN).

As for Trian Acquisition, the focus will be on companies that have a strong foundation but are being mismanaged or undermanaged (there should be a lot to choose from). Thus, the play is to provide some expertise to boost sales and cash flows.

The lead underwriters on the offering include Deutsche Bank Securities and Merrill Lynch (NYSE: MER). The proposed ticker is "TRAC."

You can find the prospectus at the SEC website. And, if you want to check out other recent IPO activity, visit DealProfiles.com.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

Billionaire Nelson Peltz may have thought he had the inside track to buy Wendy's (NYSE: WEN) since his Triarc Group already owns Arby's.

According to The Wall Street Journal, Mr. Peltz will have competition from a group including Thomas H. Lee Partners LP, Oaktree Capital, and First National Financial. The head of First National once ran the Carl's Jr. and Hardee's chains. And, a third group has come to the table, this one backed by Kelso & Co. and Oak Hill Capital Partners.

Unlike several private equity deals that are falling apart because of tight credit markets, the Wendy's deal looks like it may be done at a nice premium for shareholders. Wall Street anticipates that the company could go for $37 to $41 a share. Wendy's stock is under $34.

Why is this deal different from others? Perhaps because the most visible bidders have a great deal of experience in the fast food business. This may give them more confidence that they will know which parts of the company can be improved to yield better cash flow.

That makes Wendy's shareholders more fortunate than those in other companies being pursued for buy-outs.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Raider Nelson Peltz wants changes at Kraft (NYSE: KFT) and he may be getting them. The Wall Street Journal speculates (subscription required) that the Post cereals unit of the big food company might bring in as much as $3 billion. Pepsi (NYSE: PEP) is viewed as on of the potential buyers.

Kraft is a dog of a stock. Over the last year, its is off 5% while the S&P is up about 10%. Q2 increases in revenue and net income were both modest with total sales hitting $9.2 billion and net income $770 million.

A look at the 10-Q shows that sales by division are uneven. Most of the company's US businesses are barely growing at all. Sales at the firm's cereals division were flat at $1.61 billion. Operating income was down slightly to $226 million.

But, cereals is not the only troubled division at Kraft. Operating income dropped in four of the company's seven divisions in the last reported quarter.

Peltz is right. Time to start selling stuff off.

Douglas A. McIntyre is a partner at 24/7 Wall St.