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Oplink Communications, Inc (OPLK), Strattec Security Corp. (STRT): Why Is Mario Gabelli Bullish on These Stocks?

In a new filing with the Securities and Exchange Commission, Mario Gabelli‘s GAMCO Investors disclosed adding Oplink Communications, Inc (NASDAQ:OPLK) to its equity portfolio. GAMCO and its affiliates own a total of 1.41 million common shares of the company, which represent 8.24% of the company. In a second filing, the fund together with its affiliated reported raising their position in Strattec Security Corp. (NASDAQ:STRT) to around 608,500 shares, from 439,600 shares held earlier, the new stake being equal to 16.98% of the company.

Mario Gabelli

Oplink Communications, Inc (NASDAQ:OPLK) is a small cap designer and manufacturer of optical networking components and subsystems. Earlier this year,  Glenn Welling‘s Engaged Capital went activist on the stock and formed an activist group together with another investor Voce Capital and agreed to discuss Oplink’s operating results and costs with the management and come up with proposals to increase the shareholder value of the company. In November, Engaged inched up its stake to 913,500 shares, equal to 5.4% of the company, from 863,500 shares and sent a letter to other shareholders of the company. In the letter, both investors expressed their disappointment that the board has not taken any steps regarding the next annual meeting of shareholders. In September, Engaged nominated two directors to be elected to Oplink Communications, Inc (NASDAQ:OPLK)’s board, so its disappointment with the board not initiating a shareholder meeting is understandable.

However, GAMCO is not betting on the activist situation, but there is something else that sparked its interest. Last week, Oplink Communications, Inc (NASDAQ:OPLK) announced that it has reached an agreement with a subsidiary of Koch Industries, which will acquire Oplink in an all cash transaction for $145 million, which represents around $24.25 per share.

GAMCO raised its stake in Strattec Security Corp. (NASDAQ:STRT), after around a month ago it reduced its position. The fund has been a long-term shareholder of the company, while the stock appreciated by more than 150% since the beginning of the year. Strattec is a small cap producer of locks and keys for the automotive industry. Strattec Security Corp. (NASDAQ:STRT) managed to substantially increase its financial results over the last quarters, with its revenue for the third quarter of 2014 growing to $122 million, from $80 million a year ago and its earnings surging to $2.55 per share, from $0.91.

Chuck Royce‘s Royce & Associates is another shareholder of Strattec Security Corp. (NASDAQ:STRT), which surged its position by more than 150% during the third quarter to 383,800 shares. However, other investors own less significant positions, despite the stock’s solid returns and the bullish sentiment from analysts. Earlier this month, TheStreet upgraded the stock to ‘Outperform’ from ‘Neutral’ with a target price of $107.

Disclosure: none

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