In this article, we discuss 10 favorite stocks of Mario Gabelli.
Mario Gabelli is a billionaire Italian-American investor and hedge fund manager who founded GAMCO Investors, a New York-based investment advisor and brokerage firm, in 1976. Mario Gabelli is one of the most successful Wall Street financiers, who manages an $11.6 billion 13F portfolio for his clients as of the fourth quarter of 2021.
Gabelli graduated from Fordham University’s College of Business Administration in 1965. He went on to get an MBA from Columbia University Graduate School of Business, and honorary doctorates from Fordham University and Roger Williams University. He currently serves as the chief executive officer and chairman of GAMCO Investors.
GAMCO Invests is a value-oriented hedge fund that follows an active investment approach. The fund seeks out large-cap companies with strong long-term growth prospects, with valuations that are relatively attractive as compared to their earning potential. ESG approach is also a longstanding strategy adopted by GAMCO, and the hedge fund is focused on sustainability as a long-term theme, with governance being a top priority.
Mario Gabelli is keen on the materials, information technology, healthcare, finance, consumer discretionary, consumer staples, and communications sectors. Some of the most notable stocks in the fourth quarter portfolio of GAMCO Investors include The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG).
Mario Gabelli of GAMCO Investors
Our Methodology
We used the Q4 2021 portfolio of Mario Gabelli’s GAMCO Investors to enlist the hedge fund’s top 10 stock picks.
Favorite Stocks of Mario Gabelli
10. The Bank of New York Mellon Corporation (NYSE:BK)
GAMCO Investors’ Stake Value: $124,526,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.06%
Number of Hedge Fund Holders: 49
The Bank of New York Mellon Corporation (NYSE:BK) is a leading American corporate investment bank that specializes in global wealth management, financial analysis, and private equity. Mario Gabelli’s GAMCO Investors trimmed its stake in The Bank of New York Mellon Corporation (NYSE:BK) during Q4 2021 by 7%, holding 2.14 million shares worth $124.5 million.
On April 18, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.34 per share, in line with previous. The dividend is payable on May 11, to shareholders of record on April 28. The stock delivers a dividend yield of 3.14% as of April 26.
The Bank of New York Mellon Corporation (NYSE:BK) posted its Q1 2022 earnings on April 18, announcing an EPS of $0.94, above consensus by $0.08. The $3.93 billion revenue fell short of analysts’ estimates by $12.30 million. The exit from Russia hurt the Q1 results, but a rising rates environment is expected to help the upcoming quarters.
JPMorgan analyst Vivek Juneja on April 27 downgraded The Bank of New York Mellon Corporation (NYSE:BK) to Neutral from Overweight, slashing the price target to $51.50 from $59. The analyst also removed the stock from the firm’s Analyst Focus List, stating that the company’s asset sensitivity to higher interest rates will likely be partially offset by the restructuring of its securities portfolio and shrinkage of deposits due to pressure on capital.
According to Insider Monkey’s Q4 data, 49 hedge funds were bullish on The Bank of New York Mellon Corporation (NYSE:BK), with combined stakes exceeding $5 billion, compared to 46 funds in the prior quarter, holding stakes in the company worth $4.65 billion. Warren Buffett’s Berkshire Hathaway is the biggest position holder in The Bank of New York Mellon Corporation (NYSE:BK), with 72.3 million shares valued at $4.20 billion.
In addition to The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG), The Bank of New York Mellon Corporation (NYSE:BK) is a notable stock from Mario Gabelli’s Q4 portfolio.
Here is what Ariel Investments has to say about The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
9. Watts Water Technologies, Inc. (NYSE:WTS)
GAMCO Investors’ Stake Value: $126,940,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.08%
Number of Hedge Fund Holders: 23
Watts Water Technologies, Inc. (NYSE:WTS) is a Massachusetts-based company that designs and sells systems that manage the flow of fluids and energy in buildings. The company caters to the commercial and residential markets in the Americas, Europe, the Asia-Pacific, the Middle East, and Africa.
Securities filings for Q4 2021 reveal that Mario Gabelli’s fund owns 653,757 shares of Watts Water Technologies, Inc. (NYSE:WTS), worth approximately 127 million, representing 1.08% of the total 13F portfolio. The hedge fund slashed its stake in Watts Water Technologies, Inc. (NYSE:WTS) by 10% in the fourth quarter of 2021.
On April 18, Stifel analyst Nathan Jones lowered the firm’s price target on Watts Water Technologies, Inc. (NYSE:WTS) to $148 from $159 and kept a Hold rating on the shares. At a high level, the analyst forecasts Q1 2022 to look “a lot like” Q4 2021, with guidance for Q2 also looking similar.
Among the hedge funds tracked by Insider Monkey, 23 funds were long Watts Water Technologies, Inc. (NYSE:WTS) at the end of December 2021, compared to 16 funds in the preceding quarter. The total stakes held in Q4 2021 roughly amounted to $542 million. Ian Simm’s Impax Asset Management is the leading shareholder of the company, with 1.84 million shares worth $356.76 million.
8. Textron Inc. (NYSE:TXT)
GAMCO Investors’ Stake Value: $148,655,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.27%
Number of Hedge Fund Holders: 35
Textron Inc. (NYSE:TXT) was founded in 1923 and is headquartered in Providence, Rhode Island, operating in the aircraft, defense, industrial, and finance sectors. Mario Gabelli’s GAMCO Investors held 1.92 million Textron Inc. (NYSE:TXT) shares in Q4 2021, worth $148.65 million, representing 1.27% of the total 13F holdings.
On March 7, Jefferies analyst Sheila Kahyaoglu noted that Textron Inc. (NYSE:TXT)’s Aviation backlog is supported by new entrants and model upgrades. Given some Aviation tailwinds and a potential FLRAA win for a $80 billion program likely to be awarded in June/July “on its doorstep”, Textron Inc. (NYSE:TXT)’s present levels “could prove compelling” since shares are trading at a 27% discount to peers, compared to the stock’s historical discount of approximately 20%. The analyst maintained a Buy recommendation and a $90 price target on Textron Inc. (NYSE:TXT) shares.
According to Insider Monkey’s fourth quarter database, 35 hedge funds reported owning stakes in Textron Inc. (NYSE:TXT), worth $1.09 billion, compared to 31 funds in the prior quarter, holding stakes in the company valued at $1.13 billion. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest shareholder of Textron Inc. (NYSE:TXT), with 4.3 million shares worth $339.1 million.
7. American Express Company (NYSE:AXP)
GAMCO Investors’ Stake Value: $148,663,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.27%
Number of Hedge Fund Holders: 64
American Express Company (NYSE:AXP) is a New York-based multinational corporation that offers finance products and solutions, such as charge cards, credit cards, traveler’s cheques, and corporate banking. The company also offers insurance services. Mario Gabelli’s GAMCO Investors owns 908,697 shares of American Express Company (NYSE:AXP) as of Q4 2021, worth $148.6 million, representing 1.27% of the total portfolio.
American Express Company (NYSE:AXP) reported on April 22 its Q1 results, posting earnings per share of $2.73, beating market estimates by $0.26. Revenue for the period grew almost 29.5% year-over-year to $11.74 billion, outperforming Street forecasts by $76 million.
On March 10, American Express Company (NYSE:AXP) declared a $0.52 per share quarterly dividend, a 20.9% increase from its prior dividend of $0.43. The dividend is payable on May 10, to shareholders of record on April 8.
Citi analyst Arren Cyganovich raised the price target on American Express Company (NYSE:AXP) to $190 from $187 and maintained a Neutral rating on the shares on April 26. According to the analyst, American Express Company (NYSE:AXP) reported strong results but the outperformance relative to estimates was primarily due to lower provision and tax rate.
Ken Fisher’s Fisher Asset Management is one of the leading shareholders of American Express Company (NYSE:AXP), with 15.74 million shares worth $2.5 billion. Overall, 64 hedge funds were bullish on the stock at the end of December 2021.
Here is what ClearBridge Investments has to say about American Express Company (NYSE:AXP) in its Q2 2021 investor letter:
“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.”
6. Crane Co. (NYSE:CR)
GAMCO Investors’ Stake Value: $150,516,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.28%
Number of Hedge Fund Holders: 25
Crane Co. (NYSE:CR) is based in Stamford, Connecticut, operating as a manufacturer of engineered industrial products in the United States, Canada, the United Kingdom, Continental Europe, and international markets. The company specializes in aerospace and electronics, engineered materials, payment and merchandising technologies, fluid handling, and sensing and control systems.
Securities filings for the fourth quarter of 2021 disclosed that Mario Gabelli held about 1.5 million shares of Crane Co. (NYSE:CR), worth $150.5 million, accounting for 1.28% of the total 13F securities.
Crane Co. (NYSE:CR) declared on April 25 a $0.47 per share quarterly dividend, in line with previous. The dividend is distributable on June 8, for shareholders of record on May 31. The company announced its Q1 2022 financial results on April 25, reporting earnings per share of $1.81, beating consensus estimates by $0.13. The $801.10 million revenue also outperformed market forecasts by $338,940.
On April 18, Stifel analyst Nathan Jones reiterated a Buy rating on Crane Co. (NYSE:CR) but lowered the firm’s price target on the stock to $134 from $137 as part of his earnings preview note for his diversified industrials coverage.
According to Insider Monkey’s Q4 data, 25 hedge funds were bullish on Crane Co. (NYSE:CR), with collective stakes worth $310.6 million, compared to 20 funds in the earlier quarter, holding stakes in the company valued at $286.2 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a significant shareholder of Crane Co. (NYSE:CR), with a position worth about $51 million.
Elite investors are pouring into Crane Co. (NYSE:CR), just like The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG).
5. GATX Corporation (NYSE:GATX)
GAMCO Investors’ Stake Value: $175,707,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.50%
Number of Hedge Fund Holders: 14
GATX Corporation (NYSE:GATX) was established in 1898 and is headquartered in Chicago, Illinois. The company leases freight railcars and locomotives to the petroleum, chemical, agriculture, and transportation industries. In the fourth quarter of 2021, Mario Gabelli’s GAMCO Investors owned 1.6 million shares of GATX Corporation (NYSE:GATX), worth $175.70 million, representing 1.50% of the total 13F securities.
Financial results for the quarter ending March 2022 were published on April 20. GATX Corporation (NYSE:GATX) reported earnings per share of $2.34, beating analysts’ consensus estimates by $0.95. The $316.60 million revenue missed Street predictions by $6.15 million.
GATX Corporation (NYSE:GATX) declared on April 22 a $0.52 per share quarterly dividend, in line with previous. The dividend is payable on June 30, to shareholders of record on June 15. Sidoti analyst Marla Backer upgraded GATX Corporation (NYSE:GATX) to Buy from Neutral with a $130 price target on February 2.
According to Insider Monkey’s Q4 data, 14 hedge funds were long GATX Corporation (NYSE:GATX), up from 12 funds in the prior quarter. The total stakes held by elite funds in the fourth quarter of 2021 amounted to $215 million. Israel Englander’s Millennium Management is a prominent shareholder of the company, with 179,109 shares worth $18.6 million.
4. Mueller Industries, Inc. (NYSE:MLI)
GAMCO Investors’ Stake Value: $184,030,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.57%
Number of Hedge Fund Holders: 18
Headquartered in Collierville, Tennessee, Mueller Industries, Inc. (NYSE:MLI) sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. As of Q4 2021, Mario Gabelli’s fund reported owning a $184 million stake in Mueller Industries, Inc. (NYSE:MLI).
On February 18, Mueller Industries, Inc. (NYSE:MLI) declared a $0.25 per share quarterly dividend, a 92.3% increase from its prior dividend of $0.13. The dividend was paid on April 1, to shareholders of record on March 18.
Mueller Industries, Inc. (NYSE:MLI) reported on April 19 Q1 GAAP earnings per share of $2.78. Revenue for the period grew 23.5% year-over-year to $1.01 billion. This is comparable to an EPS of $1.11 and a revenue of $818.1 million in Q1 2021.
Chuck Royce’s Royce & Associates is a significant shareholder of Mueller Industries, Inc. (NYSE:MLI) as of Q4 2021, with 647,002 shares worth $38.4 million. Overall, 18 hedge funds were bullish on the stock at the end of December 2021, up from 22 funds in the previous quarter.
3. CNH Industrial N.V. (NYSE:CNHI)
GAMCO Investors’ Stake Value: $192,689,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.64%
Number of Hedge Fund Holders: 35
Another notable stock in Mario Gabelli’s Q4 portfolio is CNH Industrial N.V. (NYSE:CNHI), an American manufacturer of agricultural, transportation, and construction equipment. The billionaire owns approximately 10 million shares of CNH Industrial N.V. (NYSE:CNHI) as per the 13F filings from Q4 2021, worth $192.6 million, representing 1.64% of his total 13F portfolio.
Deutsche Bank analyst Nicole DeBlase on April 14 maintained a Buy rating on CNH Industrial N.V. (NYSE:CNHI) and lowered the firm’s price target on the shares to $20 from $21. For the Q1 results in the multi-industry and machinery sector, the analyst believes estimates are achievable since most companies laid out conservative outlooks.
According to Insider Monkey’s fourth quarter database, 35 hedge funds were bullish on CNH Industrial N.V. (NYSE:CNHI), up from 25 funds in the earlier quarter. Harris Associates is the largest shareholder of the company, with almost 98 million shares worth $1.90 billion.
Here is what Longleaf Partners Fund has to say about CNH Industrial N.V. (NYSE:CNHI) in its Q4 2021 investor letter:
“CNH Industrial (55%, 2.51%; 16%, 0.65%), a leading farm equipment and commercial vehicle manufacturer globally, was another top performer for the year. CNH reported strong results throughout the year, beating our initial conservative expectations. The US agricultural cycle has been firmly in the company’s favor, driven by commodity price strength, healthy farm balance sheets, advanced technology adoption, and aging fleets feeding replacement demand. We believe we are past the mid-cycle but expect the strong upcycle to continue with the solid order books and strong visibility. On December 31, 2021, CNHI completed the demerger of its on-highway business, which includes its IVECO commercial vehicles and FPT powertrain businesses. This transaction creates a pure play off-highway company comprising the higher-multiple agricultural, construction and specialty vehicle businesses. We expect a narrowing of the discount to the net asset value once we have two focused companies valued at peer multiples.”
2. Sony Group Corporation (NYSE:SONY)
GAMCO Investors’ Stake Value: $233,463,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.99%
Number of Hedge Fund Holders: 28
Sony Group Corporation (NYSE:SONY) was incorporated in 1946 and is headquartered in Tokyo, Japan. It is a multinational conglomerate that specializes in computer hardware, consumer electronics, films and TV shows, robots, semiconductors, telecommunications equipment, and video games. Securities filings for Q4 2021 disclosed that Mario Gabelli owns 1.8 million Sony Group Corporation (NYSE:SONY) shares, worth $233.4 million, representing 1.99% of the total 13F securities.
On April 13, CLSA analyst Amit Garg downgraded Sony Group Corporation (NYSE:SONY) to Outperform from Buy with a price target of 13,000 yen, down from 18,600 yen. According to the analyst, global peer multiples have declined sharply and Sony Group Corporation (NYSE:SONY)’s earnings growth is forecasted to slow drastically from fiscal 2023. Further, the cash flow will probably be spent in games to counter competition, which yields low returns, added the analyst.
Among the hedge funds tracked by Insider Monkey, 28 funds were long Sony Group Corporation (NYSE:SONY) at the end of December 2021, collectively owning stakes worth $610 million. Brandon Haley’s Holocene Advisors is a prominent position holder in the company, with 904,051 shares valued at $114.2 million.
Here is what Cooper Investors has to say about Sony Group Corporation (NYSE:SONY) in its Q4 2021 investor letter:
“In recent years we have observed a growing market for music rights which represent another way for owners of record labels and music libraries like portfolio holdings Warner Music Group and Sony (via its subsidiary Sony Music, ~25% of our estimated enterprise value) to deploy capital, grow their businesses and create value for shareholders.
In the first few days of 2022 Warner closed a deal to acquire David Bowie’s back catalog for about US$250m which follows on from Bruce Springsteen’s catalog sale to Sony for upwards of US$500m and Bob Dylan’s sale to Universal Music for a similar amount.
The trend in demand for music copyrights is clearly strengthening, with competition for these assets coming from traditional music companies (Warner, Sony) as well as specialist investors and private equity…” (Click here to see the full text)
1. Herc Holdings Inc. (NYSE:HRI)
GAMCO Investors’ Stake Value: $316,232,000
Percentage of GAMCO Investors’ 13F Portfolio: 2.7%
Number of Hedge Fund Holders: 27
Herc Holdings Inc. (NYSE:HRI) is the largest holding in Mario Gabelli’s Q4 portfolio, with his hedge fund owning more than 2 million shares of the company, worth $316.2 million. Herc Holdings Inc. (NYSE:HRI) is a Florida-based company that rents aerial, earthmoving, material handling, trucks, air compressors, compaction, and lighting equipment in the United States.
On April 21, Herc Holdings Inc. (NYSE:HRI)’s Q1 results were reported. The company posted earnings per share of $1.95, missing estimates by $0.01. Revenue for the period increased 25% year-over-year to $567.30 million, outperforming market consensus by $14.53 million.
Baird analyst Mircea Dobre on April 22 lowered the price target on Herc Holdings Inc. (NYSE:HRI) to $158 from $161 and maintained a Neutral rating on the shares. The analyst believes further upside is limited since extremely robust expectations are already reflected in the guidance and estimates. The analyst’s medium-term view remains unchanged.
According to Insider Monkey’s database, Herc Holdings Inc. (NYSE:HRI) was found in the public stock portfolios of 27 hedge funds at the end of the fourth quarter of 2021, compared to 24 funds in the prior quarter. Carl Icahn’s Icahn Capital LP is the biggest shareholder of Herc Holdings Inc. (NYSE:HRI), with more than 4 million shares worth roughly $630 million.
You can also take a look at 7 Best Stocks to Buy Now According to Bill Ackman and 10 Best Stocks to Buy Now According to Billionaire David Harding.
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Disclosure: None. 10 Favorite Stocks of Mario Gabelli is originally published on Insider Monkey.
