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Mario Gabelli Says More Businesses Will Get ‘Contagion’ To Separate – Watch Out For These 4 Potentially Profitable Breakups

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Mario Gabelli Says More Businesses Will Get ‘Contagion’ To Separate – Watch Out For These 4 Potentially Profitable Breakups

Mergers and acquisitions have allowed many companies to grow, but some of the largest multinational conglomerates are now doing the exact opposite.

General Electric, Johnson & Johnson and Toshiba announced that they would split their businesses recently. And according to GAMCO Investors Chairman and CEO Mario Gabelli, more companies could do the same.

“When America’s boardrooms look at this, when they look at what’s going on, you have contagion,” the billionaire investor told CNBC last week.

Companies dissolve for different reasons: creating shareholder value is common.

Here are four companies that could be next on the by-product list. One could be a lucrative pickup, especially if you’re investing for free.

Macy’s (M)

Macy's Herald Square flagship department store in Midtown Manhattan

NYC Russ / Shutterstock

The first is Macy’s, which, for the most part, is known for its department stores.

In an era where e-commerce stocks are skyrocketing, being a physical retailer doesn’t attract much attention from investors.

In fact, despite experiencing an impressive bull run over the past 12 months, Macy’s shares are still down 22.5% compared to five years ago.

However, business has improved. Like-for-like sales increased 37.2% at Macy’s-owned stores in the third quarter. Meanwhile, digital sales increased 19% year-over-year.

The company also announced its plan to launch a digital market in the second half of 2022.

Last month, it was reported that activist investor Jana Partners had taken a stake in Macy’s and urged the board to separate its e-commerce business. Jana believes that the online business alone could be worth around $ 14 billion, which is significantly more than Macy’s current market capitalization of $ 10.4 billion.

Ford (F) and General Motors (GM)

Ford Mustang Mach-E, fully electric SUV

Mike Mareen / Shutterstock

Electric vehicle stocks are even hotter than e-commerce. Tesla shares have soared more than 2,800% in the last five years, while newcomers like Rivian and Lucid have also made headlines due to the fast-paced evolution of their share prices.

The valuation of pure electric vehicle stocks could be one reason for traditional automakers to part ways with their electrifying efforts, according to DataTrek co-founder Nicholas Colas.

“We have been in the auto industry long enough (30 years) to know that GM and Ford need to spin off their EV operations as soon as possible,” Colas wrote in a note to investors.

“When it was Tesla with a crazy valuation, they could afford to dismiss this idea. Now, with Rivian, Lucid, etc., they can’t. “

Both GM and Ford have done well this year, with stocks up 60% and 143%, respectively. However, their combined market capitalization is less than one-sixth that of Tesla.

Without a doubt, EV stocks are some of the most volatile tickers out there. But you don’t have to start big; These days, you can create an ESG portfolio just by using a few digital nickels and dimes.

Royal Dutch Shell (RDS.A, RDS.B)

Shell Oil Truck at the Shell gas station.

Photographer / Shutterstock

This multinational oil and gas giant has performed reasonably well in 2021, up a solid 20%. However, if you look further back, you will see that the stock is more than 25% below its pre-pandemic level.

But more shareholder value could be unlocked, at least according to billionaire hedge fund manager Daniel Loeb.

Loeb’s fund, Third Point, has acquired a sizeable stake in Shell. The activist investor is urging the company to split into two: an inherited oil and gas company and a renewable energy company.

Loeb argues that an independent energy business requires low capital expenditures, which “would prioritize the return of cash to shareholders.” Meanwhile, an independent renewable energy business “could combine a modest cash return with aggressive investment in renewables and other carbon-reducing technologies.”

In a press release last month, Shell said it “welcomes open dialogue with all shareholders, including Third Point.”

Loeb’s other “excellent” asset

Interior of the Museum of Modern Art (MoMA), an art museum, Midtown Manhattan, New York.

Anton_Ivanov / Shutterstock

Companies like Shell aren’t the only things you’ll find in Loeb’s portfolio. You also use a private way to diversify and profit.

If you want to invest in something that has very little correlation with the ups and downs of the stock market, consider this overlooked asset.

By some measures, it has outperformed the S&P 500 by dominating 174% over the past 25 years.

Investing in real assets used to be an option only for the ultra-wealthy, like Loeb. But with a new investment platform, you can also bet.

This article provides information only and should not be designed as advice. It is provided without warranty of any kind.

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