Earlier in August, billionaire Mario Gabelli’s GAMCO Investors filed its 13F with the SEC for the second quarter of 2013, disclosing many of its long equity positions as of the end of June including DIRECTV (NYSE:DTV) and American Express Company (NYSE:AXP).
We track 13Fs as part of our work researching investment strategies; for example, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy) and our own model portfolio outperformed the S&P 500 by 33 percentage points in the last 11 months. We also like to see how individual managers are playing the market and if any of their top picks look like good values. Read on for our quick take on GAMCO’s five largest 13F holdings or compare these picks to previous filings.
The asset management firm reported a position of 4.8 million shares in DIRECTV (NYSE:DTV). Reduced net margins have resulted in the company’s profits falling moderately last quarter compared to the second quarter of 2012, even though revenue was up 7%. However, DIRECTV (NYSE:DTV) is priced close to value territory with a trailing P/E of 13 (and an EV/EBITDA multiple of less than 7x) and might be worth looking at if the company can hold earnings steady in the future. Warren Buffett’s Berkshire Hathaway had over $2 billion invested in the stock at the end of March (find Buffett’s favorite stocks).
Another Berkshire favorite, American Express Company (NYSE:AXP), was among Gabelli’s top picks as well. the payment card and travel services company has been growing slowly, but throws off a good deal of cash that the company has recently been using to buy back shares. With investors anticipating significant EPS increases in the future, the trailing and forward earnings multiples are 18 and 14 respectively though we’d prefer to see more profits growth at the current trailing valuation. In addition to Buffett and Gabelli, billionaire Ken Fisher likes American Express Company (NYSE:AXP): his Fisher Asset Management owned nearly 11 million shares at the end of Q1 (research more stocks Fisher owns).
GAMCO disclosed ownership of 3.4 million Class A shares of Viacom, Inc. (NASDAQ:VIAB). The entertainment company- which operates a number of cable networks as well as film entertainment including under the Paramount name- announced double-digit growth rates on both top and bottom lines in its most recent quarter compared to the same period in the previous fiscal year. This is in line with entertainment stocks reporting good results generally, and peers generally trade at earnings multiples close to Viacom’s as well. Coatue Management, managed by Philippe Laffont, has also held a significant position in Viacom (check out more stocks Laffont likes).