Usually the whole is greater than the sum of its parts — not to investment guru Mario Gabelli.
The CEO of Gamco Investors told CNBC Monday he wants to invest in companies that have a history of splitting off successful businesses, or could split off businesses, and then invest in both companies.
“What we do is not complicated,” he said. He looks at the world and wonders what it's going to look like over the next 10 years “and then we do stock analysis covering sectors globally.”
The mantra of the 1960s was conglomeration, but today the focus is on growth, he said.
“How do you take a company and take its capital and move it to its highest rate of return? Split-ups are an example of that,” Gabelli said. “We look at finding the company that was spun off and say, is this attractive?”
Case in point: Fortune Brands, whose stock Gabelli bought going on 40 years ago when it was the American Tobacco Co. It eventually became known as Fortune Brands. Then it started splitting off businesses before eventually dividing itself into Fortune Brands Home & Security and Beam Inc., maker of Jim Beam bourbon.
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.Page 1 of 3 | Next Page