Navistar International Corp (NAV), Hillshire Brands Co (HSH): Billionaire Mario Gabelli’s Takeover Targets

Page 1 of 2

Billionaire Mario Gabelli of GAMCO Investors appeared on CNBC on July 9th to discuss a variety of topics, including three stocks which he thought might be potential takeover targets. Acquisitions of public companies occur at significant premia to the market price, allowing investors to earn high profits if they guess right, but we don’t like relying entirely on this kind of speculation and would advise to see that the company is a decent value in its own right before buying.

A trucking takeover

Mario GabelliThe billionaire listed Navistar International Corp (NYSE:NAV) as one of his stocks to watch. We track quarterly 13F filings from hedge funds and other notable investors such as GAMCO as part of our work developing investment strategies (for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year) and can see that GAMCO owned 4.6 million shares of Navistar International Corp (NYSE:NAV) as of the end of March; find Gabelli’s favorite stocks.

Navistar International Corp (NYSE:NAV) has been struggling the past few years as its new truck engine did not meet government standards, which drove the stock price down about 50% in the last two years and has analysts calling for losses of $7.63 per share for the current fiscal year. Billionaire activist Carl Icahn has been another major shareholder of Navistar International Corp (NYSE:NAV)—check out more stocks Icahn owns—and had previously tried to merge the company with peer Oshkosh.

Packaged meats

Hillshire Brands Co (NYSE:HSH), a primarily packaged meats company, was another of Gabelli’s potential takeover targets. Hillshire Brands Co (NYSE:HSH)’s revenue was about flat in its most recent quarterly report compared to the same period in the previous fiscal year, yet the stock is still valued at 19 times forward earnings estimates. Part of the reason for this premium pricing is that M&A activity in food companies has been heating up, and the market is anticipating a potential deal. In fact, Hillshire Brands Co (NYSE:HSH)’s own closest peer Smithfield Foods, Inc. (NYSE:SFD) has received an offer from Chinese pork producer Shuanghui.

While the deal might not close, as a number of U.S. constituencies object to the possibility that the U.S. food supply could become exposed to Chinese pork (Shuanghui has stated that, in fact, pork would be exported to China from the U.S.). In addition, activist fund Starboard Value has taken a nearly 6% stake in the company and has been urging the company to break up and potentially sell some divisions. At its current price Smithfield Foods, Inc. (NYSE:SFD) is valued at 11 times consensus earnings for the forward fiscal year.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!