One of my favorite things to wake up to in the morning is a good fud piece, or clickbait as it were. Written by Sneha Shah from Insider Monkey, the headline for her piece reads as such:

 Billionaire Gabelli Says Sony Corp (SNE) Should Split 

So what did Gabelli actually say? Before we get into that, here is what Shah wrote as a setup for the billionaire, which is designed to give his opinion more weight.

 Mario Gabelli, the billionaire chairman and CEO of Gamco Investors, recently talked about some of his holdings such as Sony Corp in a recent interview on CNBC. Gabelli founded his investment firm in 1977 and is one of the top paid executives on Wall Street. He uses a value investing approach to fund management and is one of the main proponents of the Graham and Dodd School of security analysis. 

That all seems quite impressive, putting Gabelli, whom I’ve never met and I’m sure is as smart as Shah claims, on a fairly high pedestal, thus putting the air out there that we should be tightly tuned into what he’s saying. Now here is what Wikipedia has to say about Gabelli:

 Mario Joseph Gabelli (born June 19, 1942) is an American stock investor, investment advisor, and financial analyst. He is the founder, chairman, and CEO of Gabelli Asset Management Company Investors (GAMCO Investors), an investment firm headquartered in Rye, New York. Forbes Magazine listed him as #346 on the list of wealthiest Americans in the 2006 Forbes 400 and estimated his net worth at $1 billion as of 2011. 

My quarrel here isn’t with Gabelli (pictured left) – like I said, I’m sure he’s quite the nice guy and smart investor, but the differing descriptions paint almost two entirely different investors. From Shah’s description, you almost have a Warren Buffet like character in mind, which Gabelli isn’t. So what did Gabelli say about Sony?

 Gabelli said that Sony Corp is one of his holdings and he is quite positive about its future. The company is in the midst of a turnaround with a new CEO and CFO. He likes Sony Corp, which is currently trading at ~$32, with a market capitalization of ~$39 billion. The Japanese conglomerate is engaged in a number of businesses ranging from mobiles, gaming, movie making, financial services, and electronics. Gabelli mentioned that if the financial services business were to be sold or spun-off, which he thinks it should do, the company would have no debt. 

Ok, so far nothing about Sony splitting, except that last sentence.

 Gabelli mentioned that if the financial services business were to be sold or spun-off, which he thinks it should do, the company would have no debt. 

Wanting Sony to sell off or spin off their financial services division is a very different affair than saying

 Sony should split 

yet for a financial writer, the headline can convey two very different outcomes on a company’s perception and stock price. Investors do love a good story about a company splitting up and this plays right into that notion. Shah further writes:

 Sony is strong both in content and distribution and its electronics business is seeing good traction and making good progress in areas such as AI, sensors and robots. He is also positive about its entertainment business and its PlayStation segment. 

I’m not saying Sony hasn’t made progress on AI and robotics, but we’ve also seen zero proof that they have. The Xperia Ear, which is the first product from Sony to take advantage of their in-house AI, has yet to launch, and there is no word on when the Xperia Agent and Projector will launch. As for robotics, Sony has only recently made gestures about wanting to pick up where they left off a decade ago with AIBO, their robotic dogs from the 90’s, but we’ve yet to see anything out of the company and we likely won’t for another year or two.

I can’t help but find something off about this piece the more I read into it.

Shah’s portrayal of what Gabelli said, though nuanced, is quite different of what was actually said and her grasp of Sony is rather optimistic to the point that either she knows or has seen something we haven’t – or we’ve got the ultimate puff piece on our hands.

Discuss:

Do you find something off about Shah’s portrayal of Sony and Gabelli as well?