In this article, we discuss the 10 best stocks to buy according to billionaire Mario Gabelli.
Mario Gabelli, the chief of New York-based GAMCO Investors, has a net worth of close to $2 billion and manages more than $11.7 billion in assets through his hedge fund that focuses on investments in the industrial and consumer goods sectors of the economy. According to an annual report issued in March 2020, the investment firm generated more than $28 billion in returns on investments for institutional and private clients in the forty two years leading up to 2020, largely through a value investing strategy focusing on small cap stocks.
According to the latest filings, the top five holdings of GAMCO Investors at the end of June 2021 comprised just 8.16% of the total portfolio, a somewhat of an anomaly in the hedge fund universe where many top funds have growth focused portfolios loaded with large caps that dominate value. Gabelli, a famous value investor, has instead championed a business strategy that concentrates on acquisition of public companies and the management of cash flows to increase their value in the private market.
This has proved to be a winning strategy that has won Gabelli many awards, including Money Manager of the Year in 2010 and Fund Manager of the Year in 1997. Some of the top and notable holdings in the GAMCO Investors portfolio at the end of the second quarter of 2021 were The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), Microsoft Corporation (NASDAQ: MSFT), Herc Holdings Inc. (NYSE: HRI), American Express Company (NYSE: AXP), and CNH Industrial N.V. (NYSE: CNHI), among others discussed in detail below. The success of Gabelli is often cited as a refreshing exception in the world of big finance that has had a dismal start to the millennium.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, here is our list of the 10 best stocks to buy according to billionaire Mario Gabelli. These were ranked keeping in mind the investment portfolio of GAMCO Investors at the end of the second quarter of 2021. However, in order to give potential investors a deeper insight into the companies, the basic business fundamentals, analyst ratings, and hedge fund holders are also discussed. Hedge fund sentiment was gauged using data from 873 funds tracked by Insider Monkey.
Best Stocks to Buy According to Billionaire Mario Gabelli
10. Ryman Hospitality Properties, Inc. (NYSE: RHP)
Number of Hedge Fund Holders: 22
Ryman Hospitality Properties, Inc. (NYSE: RHP) is placed tenth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The company operates from Tennessee and operates as a hospitality real estate investment trust. Latest data shows that GAMCO Investors owned 1.4 million shares in the firm at the end of June 2021. This was worth $114 million and represented 0.97% of the portfolio. Gabelli has trimmed stake in the firm by 2% when compared to the filings for the first three months of the year.
On August 5, investment advisory Deutsche Bank maintained a Buy rating on Ryman Hospitality Properties, Inc. (NYSE: RHP) stock and raised the price target to $95 from $88, noting that the firm was shaping up to recover to 2019 levels by 2022.
At the end of the second quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $342 million in Ryman Hospitality Properties, Inc. (NYSE: RHP), the same as in the previous quarter worth $356 million.
In its Q4 2020 investor letter, Bireme Capital, an asset management firm, highlighted a few stocks and Ryman Hospitality Properties, Inc. (NYSE: RHP) was one of them. Here is what the fund said:
“In Q3, we purchased shares of Ryman Hospitality Properties (RHP), another company whose business and stock price were temporarily crushed by the pandemic. Ryman is an owner of large, convention-focused hotels under the “Gaylord” banner. Prior to 2020, the company had grown EBITDA every year since 2012, and has a demonstrated ability to profitably develop new hotels from scratch, having opened 5 since the year 2000. These hotels dominate their niche in the conference and convention segment: they have more meeting space square footage than almost all of their competitors.
Ryman also operates a fast-growing music venue business, which includes the Ryman Auditorium, the Grand Ole Opry, and a chain of bar and concert venues called “Ole Red.” These comprise RHP’s “entertainment” segment, which grew EBITDA from $14.5m in 2011 to $58m in 2019, an 18% CAGR.
We think the company will do more than $300m of free cash flow in 2022. When we were buying RHP at the end of Q3, it had a market cap of $2.0b, a mere 6x multiple of FCF. While the market cap has recently increased to $3.7b, we still find the valuation very attractive for a company with their track record.”
9. The Bank of New York Mellon Corporation (NYSE: BK)
Number of Hedge Fund Holders: 52
The Bank of New York Mellon Corporation (NYSE: BK) is ranked ninth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The firm markets financial services and operates from New York. GAMCO Investors owned more than 2.3 million shares in the firm that are valued at over $121 million, representing 1.03% of the portfolio of the hedge fund. Gabelli has trimmed stake in the firm by 3% compared to the first quarter of 2021.
On July 20, investment advisory Argus upgraded The Bank of New York Mellon Corporation (NYSE: BK) stock to Buy from Hold with a price target of $55, underlining that the revenue of the company was expected to improve on a high short-term interest rate environment.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in The Bank of New York Mellon Corporation (NYSE: BK), up from 49 the preceding quarter worth $4.7 billion.
Along with The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), Microsoft Corporation (NASDAQ: MSFT), Herc Holdings Inc. (NYSE: HRI), American Express Company (NYSE: AXP), and CNH Industrial N.V. (NYSE: CNHI), The Bank of New York Mellon Corporation (NYSE: BK) is one of the best stocks to buy according to billionaire Mario Gabelli.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and The Bank of New York Mellon Corporation (NYSE: BK) was one of them. Here is what the fund said:
8. Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD)
Number of Hedge Fund Holders: 29
Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) is a California-based aerospace and defense firm. It is placed eighth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. Gabelli, through GAMCO Investors, owned more than 2.5 million shares in the company that are worth over $123 million, representing 1.04% of the portfolio. The billionaire has trimmed GAMCO’s stake in the company by 10% over the second quarter of 2021.
In earnings results for the second quarter, posted on July 26, Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) reported earnings per share of $0.59, beating market predictions by $0.15. The revenue over the period was close to $557 million, beating estimates by $21 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Steel Partners is a leading shareholder in Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) with 3.9 million shares worth more than $190 million.
In addition to The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), Microsoft Corporation (NASDAQ: MSFT), Herc Holdings Inc. (NYSE: HRI), American Express Company (NYSE: AXP), and CNH Industrial N.V. (NYSE: CNHI), Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) is one of the best stocks to buy according to billionaire Mario Gabelli.
7. Textron Inc. (NYSE: TXT)
Number of Hedge Fund Holders: 22
Textron Inc. (NYSE: TXT) is a Rhode Island-based aerospace and defense firm. It is ranked seventh on our list of 10 best stocks to buy according to billionaire Mario Gabelli. GAMCO Investors owned close to 2 million shares in the firm at the end of June 2021 that are valued at more than $136 million, representing 1.16% of the portfolio. Gabelli has trimmed stake in the firm by 3% compared to the first quarter of 2021.
On August 2, investment advisory Jefferies reiterated a Buy rating on Textron Inc. (NYSE: TXT) stock and raised the price target to $90 from $80, appreciating the earnings beat of the company in the second quarter and raised guidance for the fiscal year.
At the end of the second quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $962 million in Textron Inc. (NYSE: TXT), up from 21 in the previous quarter worth $702 million.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), Microsoft Corporation (NASDAQ: MSFT), Herc Holdings Inc. (NYSE: HRI), American Express Company (NYSE: AXP), and CNH Industrial N.V. (NYSE: CNHI) are some of the best stocks to buy according to billionaire Mario Gabelli, just like Textron Inc. (NYSE: TXT).
6. Mueller Industries, Inc. (NYSE: MLI)
Number of Hedge Fund Holders: 17
Mueller Industries, Inc. (NYSE: MLI) is placed sixth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The firm makes and sells copper, brass, and plastic products. It operates from Tennessee. According to the latest regulatory filings, at the end of June, GAMCO Investors owned 3.1 million shares in the firm that are valued at $137 million, representing 1.16% of the portfolio. GAMCO has trimmed stake in the company by 1% compared to the filings for the first three months of the year.
On July 20, Mueller Industries, Inc. (NYSE: MLI) posted earnings for the second quarter, reporting earnings per share of $1.92 and a revenue of over $1 billion, up more than 100% compared to the revenue over the same period last year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Mueller Industries, Inc. (NYSE: MLI) with 857,834 shares worth more than $37 million.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), Microsoft Corporation (NASDAQ: MSFT), Herc Holdings Inc. (NYSE: HRI), American Express Company (NYSE: AXP), and CNH Industrial N.V. (NYSE: CNHI) are some of the best stocks to buy according to billionaire Mario Gabelli, along with Mueller Industries, Inc. (NYSE: MLI).
5. Crane Co. (NYSE: CR)
Number of Hedge Fund Holders: 25
Crane Co. (NYSE: CR) is ranked fifth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The firm markets engineered industrial products and is headquartered in Connecticut. GAMCO Investors, according to the latest filings, owned more than 1.5 million shares in the firm at the end of the second quarter of 2021, representing 1.18% of the portfolio. These shares are worth $140 million and GAMCO has trimmed stake in the company by 1% when compared to the filings for the first three months of 2021.
On July 27, investment advisory DA Davidson maintained a Buy rating on Crane Co. (NYSE: CR) stock and raised the price target to $115 from $110, noting that the earnings beat of the firm in the second quarter was driven by strong organic sales growth.
At the end of the second quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $303 million in Crane Co. (NYSE: CR), up from 17 in the previous quarter worth $277 million.
4. GATX Corporation (NYSE: GATX)
Number of Hedge Fund Holders: 17
GATX Corporation (NYSE: GATX) is a Chicago-based equipment finance company. It is placed fourth on our list of 10 best stocks to buy according to billionaire Mario Gabelli. Regulatory filings reveal that GAMCO Investors owned more than 1.7 million shares in the company at the end of June 2021. These represent 1.29% of the portfolio and are worth over $153 million. Gabelli has trimmed GAMCO’s stake in the firm by 2% when compared to the first quarter.
On July 16, investment advisory Cowen upgraded GATX Corporation (NYSE: GATX) stock to Outperform from Market Perform with a price target of $101. Matt Elkott, an analyst at the firm, issued the ratings update.
At the end of the fourth quarter of 2020, 17 hedge funds in the database of Insider Monkey held stakes worth $216 million in GATX Corporation (NYSE: GATX), up from 16 in the previous quarter worth $203 million.
3. CNH Industrial N.V. (NYSE: CNHI)
Number of Hedge Fund Holders: 24
CNH Industrial N.V. (NYSE: CNHI) is a United Kingdom-based firm that makes and sells agricultural and construction equipment. It is ranked third on our list of 10 best stocks to buy according to billionaire Mario Gabelli. Latest data shows that GAMCO Investors owned close to 10 million shares in the company at the end of June 2021 that are worth around $166 million. This represents 1.41% of the entire portfolio. Gabelli has increased stake in the company by 1% when compared to the first quarter.
On May 12, investment advisory Evercore kept an Outperform rating on CNH Industrial N.V. (NYSE: CNHI) stock and raised the price target to $25 from $18, underlining that the machinery sector was highly positively correlated.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in CNH Industrial N.V. (NYSE: CNHI) with 134 million shares worth more than $2.2 billion.
In its Q1 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and CNH Industrial N.V. (NYSE: CNHI) was one of them. Here is what the fund said:
“CNH Industrial (CNH) (23%, 1.19%), one of the world’s largest agriculture machinery manufacturers, was another top contributor. CNH reported strong fourth quarter results, beating the consensus on every metric. The Agricultural Equipment (Ag) business, which represents the majority of our value, posted strong top-line growth of 19% YoY thanks to rising commodity prices, growing trade with China and the replacement of aging machinery fleets. Visibility for the first half of 2021 is strong, given solid Ag order growth across most key end markets, and we expect to see operational turnarounds in CNH’s other businesses. The company is also guiding 8-12% industrial sales growth for 2021, which is better than our initial expectation. The most positive surprise for the quarter was the company’s strong cash generation. CNH generated approximately $2.4bn FCF in the fourth quarter alone, driven by working capital release leading to a strong net cash position for the industrial segment. Due to the recent stock price appreciation, the price-to-value gap has narrowed, but we continue to have a positive view given a more favorable market outlook, the company’s strong execution capability and management’s continued commitments to value accretive transactions, including the planned splitting of the business and potentially other strategic asset sales.”
2. American Express Company (NYSE: AXP)
Number of Hedge Fund Holders: 52
American Express Company (NYSE: AXP) is placed second on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The company operates from New York and markets payments services. Gabelli, through GAMCO Investors, owned over 1 million shares in the firm at the end of the second quarter of 2021. These are worth $168 million and represent 1.42% of the portfolio. GAMCO has trimmed stake in the company by 3% compared to the first three months of the year.
On July 26, investment advisory Deutsche Bank maintained a Buy rating on American Express Company (NYSE: AXP) stock and raised the price target to $190 from $185, noting that the firm had posted a momentum building quarter.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company (NYSE: AXP) with 15.3 million shares worth more than $2.5 billion.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE: AXP) was one of them. Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
1. Herc Holdings Inc. (NYSE: HRI)
Number of Hedge Fund Holders: 20
Herc Holdings Inc. (NYSE: HRI) is ranked first on our list of 10 best stocks to buy according to billionaire Mario Gabelli. The firm operates as an equipment rental supplier. It is headquartered in Florida. According to the latest filings, GAMCO Investors owned more than 2.5 million shares in the firm at the end of June 2021 that are worth over $291 million, representing 2.46% of the portfolio. Gabelli has trimmed GAMCO’s stake in the company by 8% compared to the first quarter of the year.
On July 23, investment advisory Barclays reiterated an Overweight rating on Herc Holdings Inc. (NYSE: HRI) stock and raised the price target to $135 from $128. Adam Seiden, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Florida-based investment firm Icahn Capital LP is a leading shareholder in Herc Holdings Inc. (NYSE: HRI) with 4.4 million shares worth more than $503 million.
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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Disclosure. None. 10 Best Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.
