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Which Sectors Offer Breaks According to This Billionaire Investor?

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Mario Gabelli of GAMCO Investors identified some sectors which may offer opportunities for investors in a discussion on Fox Business Network. Speaking to Maria Bartiromo and company, Gabelli said that infrastructure, health and wellness, and real estate are the segments that investors should be looking at while picking the next investment opportunity.


We follow investors like Mario Gabelli because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 118%, outperforming the S&P500 ETF by over 60 percentage points (see more details here).

Mario Gabelli started GAMCO Investors in 1986. As of the end of June, the fund had an equity portfolio valued at about $18.46 billion. The whole GAMCO family of firms traces back its roots to 1977 and has more than $45 billion in assets under management. GAMCO spearheads the use of an investing approach it calls the Private Market Value with a Catalyst approach which uses fundamentals and treats companies as a potential acquirer would. In April, GAMCO announced plans to split into two separate publicly-traded firms with Gabelli retaining his post as chairman and chief executive officer of the asset management business.

Mario Gabelli
Mario Gabelli
GAMCO Investors

In the discussion on Fox Business Network, the first sector Gabelli said he sees opportunity for investors is in infrastructure. Joking that he sees how much infrastructure sucks whenever he drives, he said that problems in the current infrastructure of the country are easy to fix and will generate a lot of employment. He added that avionics, the application of electronic systems to planes and satellites, is one subset of the infrastructure sector that he is very much interested in. In terms of the more traditional infrastructure stocks, he agreed with the Fox hosts that Vulcan Materials Company (NYSE:VMC) may be a good pick. He also identified Astec Industries, Inc. (NASDAQ:ASTE) as a potential candidate for investment. He noted that once you look at the components of the narrowly-defined infrastructure components such as bridges, you see different companies such as makers of grates and other components.

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