GAMCO Investors, a fund run by billionaire Mario Gabelli, is one of more than 700 funds that we track at Insider Monkey. The fund has beaten the S&P 500 by a little over 2% per year since inception in 1986. Mario Gabelli, who was named Morningstar’s Fund Manager of the Year in 1997 and The Institutional Investor’s Money Manager of the Year in 2010, is one of a number of investors who have started with value investing founding fathers Graham and Dodd and added their own twist on that long-standing advice.
Mr. Gabelli’s remarkable biography makes him one of the most interesting investors to follow. The billionaire prefers to hold a very diversified portfolio and he likes to invest in big names and companies that have sizable gross margins. GAMCO Investors’ latest 13F displays a strong focus on the Consumer Discretionary, Industrial and Finance sectors and its extensive holdings are represented by some of the largest and best performing companies from these sectors, such as: DIRECTV (NASDAQ:DTV), Ryman Hospitality Properties Inc (NYSE:RHP), Bank of New York Mellon Corp (NYSE:BK), Legg Mason Inc (NYSE:LM), and American Express Company (NYSE:AXP).
Following activity of investors like Mr. Gabelli can help generate market-beating returns as it has been determined through empirical studies conducted by the founder of Insider Monkey, Dr. Ian Dogan. He determined that 15 most popular small-cap ideas of great investors can beat the market by around 1.0 percentage point per month and generate an annual double-digit alpha. Based on the results of backtests, we launched our small-cap strategy in August 2012 and over the last 2.5 years it managed to return over 130%, outperforming the S&P 500 ETF (SPY) by more than 80 percentage points (read more details here).
Let’s now take a closer look at Mr.Gabelli’s largest holdings as of the end of March, since they are represented by companies that the investor is fond of and have been among his long-term investments. On the first spot is DIRECTV (NASDAQ:DTV) in which GAMCO Investors disclosed a $314.91 million position that contains 3.70 million shares, down by 4% on the quarter. DirecTV is a company is a provider of digital television entertainment in the United States and Latin America. One of the main reasons that Mr. Gabelli owns shares of DirecTV is the upcoming merger with AT&T, which last year made a $48 billion bid to buy DIRECTV (NASDAQ:DTV). However, latest reports suggest that after the merger between Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc (NYSE:TWC) fell through, the Federal Communications Commission is now watching closer the combination between DirecTV and AT&T. The transaction came into spotlights after Netflix urged the regulators to reject the deal in its current state that could make the merged company the largest Internet service provider. Another large shareholder of DIRECTV (NASDAQ:DTV) is Warren Buffett’s Berkshire Hathaway, which owns 31.35 million shares as of the end of 2014.