“They cut a ton of advertising spending,” he said. “If you’re not going to spend behind them, you’re clearly not going to grow sales. I think they came to that realization, and now they’re dumping a ton of money back into the business.”
Schmitz noted that the company recently announced that it would look to turn around its soft-drink business in the next 12 to 18 months, possibly spinning off its U.S.-based division if that did not occur.
“If they do decide to split it up, you’re going to get a very big multiple on that Frito business so I do think it would be value-enhancing, but let’s just see if this reinvestment behind the soda business works,” Schmitz said.
Last month, PepsiCo CEO Indra Nooyi said there were no plans to split the company.
Pete Najarian of OptionMonster.com, already a shareholder, remained positive.
“I think I would consider adding to it because this sort of plays out a lot like the ConocoPhillps example, where you’re talking about some of the spin-offs, trying to get some of that value,” he said.
Anthony Scaramucci of SkyBridge didn’t like the idea of a split.
“They should keep this company together for now, get the right driver in the car and this thing will take off,” he said.
Trader Jon Najarian said the 3 percent dividend yield “these days is like manna from heaven.”
“You’re paid to hold this stock and there’s that potential of a spin-off in the future there, whether it’s the U.S. beverage business or the snack business, which is the bigger pop, so I would not sell shares here,” he added.
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Trader disclosure: On March 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long WFC calls; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long JOYG calls; P. Najarian is long COP; P. Najarian is long PEP; P. Najarian is long HPQ; Scaramucci is long IBM; Scaramucci is long PFE; Scaramucci is long GS; Scaramucci is long JPM; Scaramucci is long PEP; Scaramucci is long DELL; Scaramucci is long HPQ; Kelly is long SPY; Kelly is long IWM; Kelly is long KRE; Kelly is long TLT; Kelly is long GLD; Kelly is long SLV; Kelly is long US dollar; Kelly is long Mexican peso; Kelly is short Yen; Kelly is short Aussie $;
SkyBridge Capital Is A Fund Of Funds Manager
Anthony Scaramucci is one of 8 national finance chairs for Mitt Romney campaign
Scaramucci a fundraiser for Mitt Romney and has contributed to the Romney campaign
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(PEP) Is an Investment Banking client of DBSI. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
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