The funds affiliated with Mario Gabelli acquired an aggregate of around 1.22 million common shares of The Pantry Inc (NASDAQ:PTRY). Through this latest transaction, the entities in question added a new position to their holdings and now own 5.24% of the company’s outstanding shares. Although the stake is of activist nature, Mr Gabelli has made it clear that he does not intend to seek control of The Pantry, nor interfere with its investment philosophy.
In his position as chief investment officer of numerous funds and asset management firms, Mario Gabelli is one of the industry’s most respected investors. Since its inception in 1986, Gabelli’s asset manager Gamco Investors has grown above the S&P 500 by more than 2% each year, through its highly diversified equity portfolio. The fund’s focus on value investments, which consists of putting greater emphasis on cash flow than on earnings, has been very successful. In fact, even Bill Gates acquired a piece of Gabelli’s firm when it went public in 1999, and his investment group Cascade LLC still holds 1.3% of outstanding shares. Despite its reputation, the asset managers’ newly acquired position in The Pantry Inc (NASDAQ:PTRY) could prove troublesome in light of the recently announced investigation of the company’s Board of Directors. Vincent Wong’s Law Offices are currently inspecting the claims related to the sale of the Company to Alimentation Couche-Tard Inc.
The Pantry Inc (NASDAQ:PTRY) is a convenience store operator active in the south east of the United States. The company distributes food, beverages, and non-food merchandise, along with fuel and ancillary products and services. The $857.6 million market cap specialty retailer was founded in 1967 and has its headquarters in Cary, North Carolina. Following a rapid increase in share price over the past six months, the company has now turned into the focus of an investigation concerning the fairness of a recent buyout. Whether the allegations of breaches of fiduciary duty and other violations of state law are true, however, is yet to be determined.
Despite the unfavorable news, Mario Gabelli and numerous institutional investors continue to bet on The Pantry. David Kowitz and Sheldon Kasowitz’s Indus Capital for example holds more than 1.17 million shares of the company, after it disclosed a 14% increase in its exposure in the last quarter. Nevertheless, other firms are less confident in the potential of The Pantry Inc (NASDAQ:PTRY) stock, such as Peter Schliemann’s Rutabaga Capital Management, which reduced its holdings by more than 35% in the third quarter. In light of recent events, this might have been a smart move. Nevertheless, Mario Gabelli’s recent move to add stock of The Pantry to the numerous equity portfolios he manages might still produce a favorable outcome.
Disclosure: Pablo Erbar holds no positions in any stocks or funds mentioned.