In this article, we discuss the top 10 stock picks of Mario Gabelli.
Mario Gabelli has earned legendary status on Wall Street through his value investing prowess, growing his hedge fund, GAMCO Investors, into one of the most formidable investment firms in the market over the past few decades. The billionaire, whose personal net worth stands close to $2 billion, in a recent noteworthy interview with business news publication Business Insider, outlined his border economic outlook and addressed the inflation concerns surrounding the stock market. Gabelli predicted that a major pullback in stocks was unlikely for at least another twelve months.
Although Gabelli is famous for his expertise on value equities, the market also takes his words on growth stocks very seriously, considering that his fund owns sizable stakes in Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT). Gabelli has termed the rise of “gamified trading platforms” like Robinhood and other applications a consequence of zero commissions and virus lockdowns, appreciating the role of technology in pushing a new generation into the market.
The hedge fund of Gabelli had a portfolio value of $11.3 billion at the end of September, The top ten holdings comprise just 15% of the portfolio, and are concentrated in the industrial and consumer goods sectors. Latest data shows that between June and September, GAMCO Investors reduced holdings in 403 stocks, made new purchases in 57, sold out of 51, and made additional purchases in 232 stocks. Gabelli gained prominence on Wall Street in the 1980s through successful bets on the telecom and media firms.
Our Methodology
The stocks were picked from the investment portfolio of GAMCO Investors at the end of the third quarter of 2021. They are arranged according to the value of each holding in the portfolio of the fund.
Top Stock Picks of Mario Gabelli
10. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 46
The Bank of New York Mellon Corporation (NYSE:BK) provides financial products and services. According to latest 13F data, the fund holds a stake in the firm worth more than $119 million, consisting of over 2.2 million shares.
In early December, The Bank of New York Mellon Corporation announced that it will be acquiring Optimal Asset Management, a direct indexing solutions provider, as part of a larger plan to build business solutions for the advisory industry.
At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $4.6 billion in The Bank of New York Mellon Corporation, compared to 52 the preceding quarter worth $4.9 billion.
Among the hedge funds being tracked by Insider Monkey, Omaha-based investment firm Berkshire Hathaway is a leading shareholder in The Bank of New York Mellon Corporation with 72 million shares worth more than $3.7 billion.
Just like Apple Inc., Amazon.com, Inc., Alphabet Inc., and Microsoft Corporation, The Bank of New York Mellon Corporation is one of the stocks that hedge funds are buying.
In its Q3 2020 investor letter, First Eagle Investment Management, 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:
“The world’s largest custody bank, Bank of New York Mellon has been challenged by the persistently low-rate environment. While custody tends to be a wide-moat business, revenue generation is highly sensitive to net interest margins. Low rates have also hurt Bank of New York’s other primary line of business—investment management—as it has been forced to waive fees on its money market funds to preserve their net asset value.”
9. Watts Water Technologies, Inc. (NYSE:WTS)
Number of Hedge Fund Holders: 16
Watts Water Technologies, Inc. (NYSE:WTS) makes and sells systems that manage and control the flow of fluids and energy. Latest filings show that GAMCO Investors is long on more than 722,429 shares in the firm worth $121 million, representing 1.07% of the portfolio.
In November, Stifel analyst Nathan Jones raised the price target on Watts Water Technologies, Inc. stock to $189 from $159 and kept a Hold rating, noting the valuation reflected the “high quality” of the company.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in Watts Water Technologies, Inc. with 2 million shares worth more than $348 million.
At the end of the third quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $515 million in Watts Water Technologies, Inc., compared to 18 the preceding quarter worth $471 million.
8. Mueller Industries, Inc. (NYSE:MLI)
Number of Hedge Fund Holders: 14
Mueller Industries, Inc. (NYSE:MLI) markets copper, brass, aluminum, and plastic products. In the filings for the third quarter, the fund detailed that it owned 3.1 million shares of the company worth $129 million, representing 1.14% of the portfolio.
Mueller Industries, Inc. has registered solid earnings and revenue growth over the past three years and is one of the most trusted names in the market due in part to a company performance history stretching back more than 100 years.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Mueller Industries, Inc. with 623,278 shares worth more than $25 million.
At the end of the third quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $220 million in Mueller Industries, Inc., compared to 17 the preceding quarter worth $227 million.
7. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Holders: 31
Textron Inc. (NYSE:TXT) operates as an aerospace and defense firm. GAMCO Investors, as of the end of September, had over 1.9 million shares of the company worth $136 million in the portfolio.
In late November, Textron Inc. announced that the Beechcraft Denali, a single-engine turboprop powered by a new Catalyst engine, completed the first test flight and reached an altitude of 15,600 feet and a top speed of 180 knots.
At the end of the third quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Textron Inc., up from 22 in the previous quarter worth $962 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Adage Capital Management is a leading shareholder in Textron Inc. with 5.2 million shares worth more than $366 million.
6. Crane Co. (NYSE:CR)
Number of Hedge Fund Holders: 20
Crane Co. (NYSE:CR) makes and sells engineered industrial products. The hedge fund of Mario Gabelli entered the fourth quarter of 2021 with more than 1.5 million shares of the company in the portfolio worth more than $142 million.
Morgan Stanley analyst Kristine Liwag recently initiated coverage of Crane Co. stock with an Equal Weight rating and a price target of $111, noting that the firm had a “market-leading niche business” with high barriers to entry.
At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $286 million in Crane Co., compared to 25 in the previous quarter worth $303 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Crane Co. with 309,281 shares worth more than $29 million.
Along with Apple Inc., Amazon.com, Inc., Alphabet Inc., and Microsoft Corporation, Crane Co. is one of the stocks on the radar of elite investors.
5. GATX Corporation (NYSE:GATX)
Number of Hedge Fund Holders: 12
GATX Corporation (NYSE: GATX) is a railcar leasing firm. According to latest 13F data, the fund holds a stake in the firm worth more than $153 million, consisting of over 1.7 million shares.
In October, investment advisory Wells Fargo reiterated an Overweight rating on GATX Corporation stock and raised the price target to $110 from $103. Analyst Allison Poliniak-Cusic issued the ratings update.
At the end of the third quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $192 million in GATX Corporation, compared to 17 in the previous quarter worth $216 million.
4. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 57
American Express Company (NYSE:AXP) provides payments and travel-related services. Latest filings show that GAMCO Investors is long on more than 934,333 shares in the firm worth $156 million, representing 1.38% of the portfolio.
Reports indicate that American Express Business Travel, a subsidiary of American Express Company, is set to go public in a SPAC-sponsored merger that values the firm at more than $5.3 billion.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company with 15.6 million shares worth more than $2.6 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.”
3. CNH Industrial N.V. (NYSE:CNHI)
Number of Hedge Fund Holders: 25
CNH Industrial N.V. (NYSE:CNHI) markets agricultural and farm machinery. In the filings for the third quarter, the fund detailed that it owned 9.9 million shares of the company worth $166 million, representing 1.46% of the portfolio.
Deutsche Bank analyst Nicole DeBlase recently maintained a Buy rating on CNH Industrial N.V. stock and raised the price target to $25 from $23, underlining that the macro outlook on the firm remained constructive heading into the new year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in CNH Industrial N.V. with 121 million shares worth more than $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. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 19
Sony Group Corporation (NYSE:SONY) makes and sells consumer electronics. GAMCO Investors, as of the end of September, had over 1.8 million shares of the company worth $209 million in the portfolio.
On December 16, news reports indicated that Sony Group Corporation had bought the recording masters and publishing music of rock legend Bruce Springsteen in a deal worth around $500 million.
At the end of the third quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $388 million in Sony Group Corporation, compared to 20 in the previous quarter worth $409 million.
1. Herc Holdings Inc. (NYSE:HRI)
Number of Hedge Fund Holders: 24
Herc Holdings Inc. (NYSE:HRI) operates as an equipment rental supplier. The hedge fund of Mario Gabelli entered the fourth quarter of 2021 with more than 2.2 million shares of the company in the portfolio worth more than $365 million.
In September, Baird analyst Mircea Dobre raised the price target on Herc Holdings Inc. stock to $158 from $145 and kept an Outperform rating, lauding a robust three-year growth plan of the firm and guidance raise.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Icahn Capital LP is a leading shareholder in Herc Holdings Inc. with 4.4 million shares worth more than $734 million.
You can also take a peek at 10 Best Micro-Cap Stocks to Invest In and Top 10 Stocks to Buy According to Charles Pollnow’s Triple Frond Partners.
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This article is originally published at Insider Monkey.
