Billionaire Mario Gabelli, who manages around $37.5 billion through his hedge fund GAMCO Investors, was one of the few Wall Street titans who had predicted Mr. Trump’s win well in advance at Barron’s investor conference earlier in the year. In one of his recent interviews after the election results were announced, Mr. Gabelli revealed that with Mr. Trump at the helm and interest rates poised to rise he is bullish on sectors like infrastructure and financials going forward. Furthermore, he also forecasted that “Financials are going to be sharply up in 2017.” Within the financial space, Mr. Gabelli is particularly bullish on trust banks, which he thinks can become ‘global powerhouse’ in the coming years, and on money management firms.
If one takes a look at GAMCO Investors’ latest 13F filing, it becomes clear that Mr. Gabelli believes in walking the talk. Although financial stocks accounted for only 10% of the $15.37 billion that the fund’s equity portfolio was worth at the end of September, all the financial stocks that Mr. Gabelli discussed during the interview were included at that time. In this post, we are going to discuss in detail five financial stocks that Mr. Gabelli is currently bullish on and their recent performance.
- Related Reading- Best 7 Online Courses to Take: Free Finance MOOCs
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 T. Rowe Price Group Inc (NASDAQ:TROW)
– Shares Held By GAMCO Investors (as of September 30) : 189,230
– Value of the Holding (as of September 30): $12.58 Million
Let’s start with T. Rowe Price Group Inc (NASDAQ:TROW), in which GAMCO sold 450 shares during the third quarter. T. Rowe Price Group Inc (NASDAQ:TROW’s stock has been one of the biggest beneficiaries of Mr. Trump’s win having registered a gain of more than 16% after election results were declared. Although this recent rally has pushed the stock back in the green for 2016, it has also lowered its forward yield to less than 3%. Earlier this month, the company revealed that after 35 years at the helm, its Chairman and CIO Brian Rogers will retire on March 31, next year. The company has appointed six people to share the responsibility of the CIO following Mr. Rogers’ departure. On November 10, analysts at UBS AG upgraded T. Rowe Price’s stock to ‘Buy’ from ‘Neutral’ and also upped their price target on it to $82 from $66, suggesting a potential upside of 11.6%.
#4 Waddell & Reed Financial, Inc. (NYSE:WDR)
– Shares Held By GAMCO Investors (as of September 30) : 1.37 Million
– Value of the Holding (as of September 30): $24.93 Million
GAMCO Investors upped its stake in Waddell & Reed Financial, Inc. (NYSE:WDR) by 33% during the third quarter. Matthew Tewksbury‘s Stevens Capital Management was another hedge fund covered by us that increased its holding in the company by 18% to 95,312 shares in the same period. Although Waddell & Reed Financial, Inc. (NYSE:WDR)’s stock has also benefitted immensely from Mr. Trump’s victory in the last few days, it is still trading down by 33.25% year-to-date. Waddell & Reed Financial is one of the best dividend stocks in the financial sector currently, sporting a forward yield of close to 10%. For its most recent quarter, the company reported EPS of $0.64 on revenue of $303.09 million versus analysts’ expectation of EPS of $0.51 on revenue of $295.65 million.