Gabelli said when the Berlin Wall came down he knew there would be more consumers coming into the market and, he added, the Chinese like their bourbon. So that was a sector he found attractive.
As for the housing part of the company, he said, “We said housing is at the bottom. The company is doing well at the bottom of a cycle. What can it do as the cycle improves?” That’s why Gabelli “bought both pieces.”
Another example is Xylem, spun off from ITT and involved in maintaining a constant clean water supply as part of the natural gas drilling known as hydraulic fracturing. There’s no fracking without water, so Gabelli wanted in.
Gabelli also looks for the potential splits. PepsiCo’s CEO, Indra Nooyi, has said she does not plan to spin off the soda giant’s snacks business to compete against Kraft Foods, which did split off its snacks division.
Gabelli said he is not pushing for a split, saying Nooyi is refocusing the advertising budget, reducing costs, and putting millions of dollars into PepsiCo’s brands.
“If that works, you have a stock that’s 20 points higher anyway,” he said. If it doesn’t work, Gabelli said, there's a “fallback position — I’ve got two CEOs who can run the separate companies. Pepsi has a history of spin-offs. They’ve done it before.”
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Mario Gabelli or his company own shares of the companies mentioned.