In this article we discuss the 10 best cheap stocks to buy according to billionaire Mario Gabelli. If you want to skip our detailed analysis of Gabelli‘s history and hedge fund performance, go directly to the 5 Best Cheap Stocks to Buy According to Billionaire Mario Gabelli.
Mario Gabelli, the billionaire owner of New York-based GAMCO Investors, recently disclosed his top holdings in a regulatory filing. Gabelli is famous for averaging handsome returns on value stocks and is affectionately referred to as ‘Super Mario’ in the finance world due to his investing prowess. According to the latest disclosures, Gabelli trimmed his stakes in many of his top holdings during the last quarter, including The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC).
GAMCO Investors, the hedge fund founded by Gabelli more than four decades ago, now holds 548,827 shares in The Walt Disney Company (NYSE: DIS) worth over $101 million. A four percent drop in activity on JPMorgan Chase & Co. (NYSE: JPM) stock over the past few months means that the fund now owns 477,573 shares in the financial services company worth over $72 million. GAMCO interest in Wells Fargo & Company (NYSE: WFC) has also been trimmed slightly and now accounts for more than 1.4 million shares worth over $58 million.
Gabelli has pioneered a bottom-up approach to value investing that evaluates the share price of a company and possible upside potential by looking at financial documents of the firm in detail, determining a margin of safety, analyzing the broader outlook of the industry that the firm is a part of, looking at the bigger trends dominating the market, and identifying investment goals for the stock. GAMCO manages more than $11 billion in assets through this strategy and averages a return of more than 52% for investors over the last twelve months.
A breakdown of the Gabelli’s portfolio makes for interesting reading as well. Most of the holdings of GAMCO Investors are concentrated in the industrial goods sector, comprising more than 25% of their overall investments. The finance sector follows close behind at 16.7%, with the services, consumer goods, and technology sectors making up the rest. Amid a broader lull in the market for value stocks, GAMCO performance in 2020 was slightly lower than the average performance of other hedge funds, but has picked up pace sharply as the economy reopens following the pandemic and the tech bubble that has dominated the market shows signs of bursting.
Gabelli has made his fortune with an incredibly diverse portfolio full of cheap stocks that offer great value for money. He is an old-school investor deftly navigating market dynamics to his advantage, unlike the broader finance world reeling from tech-led disruption. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Mario Gabelli of GAMCO Investors
With this context in mind, here is our list of the 10 best cheap stocks to buy according to billionaire Mario Gabelli.
Best Cheap Stocks to Buy According to Billionaire Mario Gabelli
10. Team, Inc. (NYSE: TISI)
Number of Hedge Fund Holders: 11
Team, Inc. (NYSE: TISI) is a Texas-based engineering services company founded in 1973. It is placed tenth on our list of 10 best cheap stocks to buy according to billionaire Mario Gabelli. Team stock has returned more than 73% to investors over the course of the past twelve months. GAMCO Investors holds more than 1.5 million shares in the company worth over $17 million, representing 0.15% of their portfolio. GAMCO has trimmed stakes in the Texan firm by 11% in the past few months.
Team, Inc. (NYSE: TISI) posted earnings for the first quarter of 2021 on May 5, reporting earnings per share of -$0.96, missing market predictions by $0.43. The revenue for the first three months of 2021 was over $194 million.
At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $77 million in Team, Inc. (NYSE: TISI), down from 13 the preceding quarter worth $79 million.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC), Team, Inc. (NYSE: TISI) is one of the best stocks to buy according to billionaire Mario Gabelli.
9. Qurate Retail, Inc. (NASDAQ: QRTEA)
Number of Hedge Fund Holders: 31
Qurate Retail, Inc. (NASDAQ: QRTEA) is a Colorado-based media conglomerate founded in 1991. It is ranked ninth on our list of 10 best cheap stocks to buy according to billionaire Mario Gabelli. Qurate stock has offered investors returns exceeding 190% in the past year. GAMCO Investors owns more than 1.6 million shares in the media company worth over $19 million, representing 0.16% of their portfolio. GAMCO activity on Qurate stock has ticked up by 5% in the past few months.
Qurate Retail, Inc. (NASDAQ: QRTEA) posted quarterly earnings results on May 7, reporting earnings per share of $0.48 for the first three months of 2021, beating market predictions by $0.20. The revenue over the period was $3.34 billion.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Lyrical Asset Management is a leading shareholder in Qurate Retail, Inc. (NASDAQ: QRTEA) with 13.8 million shares worth more than $162 million.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC), Qurate Retail, Inc. (NASDAQ: QRTEA) is one of the best stocks to buy according to billionaire Mario Gabelli.
In its Q4 2020 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Qurate Retail, Inc. (NASDAQ: QRTEA) was one of them. Here is what the fund said:
“The strongest performance for the calendar year came from Qurate Retail. Starting from a very low valuation, shares rallied as the business’s turnaround gained traction, in turn giving management the confidence to return a substantial amount of capital to shareholders, including distributing $3 per share in special dividends (more than one-third of the start-of-year stock price).”
8. Hewlett Packard Enterprise Company (NYSE: HPE)
Number of Hedge Fund Holders: 27
Hewlett Packard Enterprise Company (NYSE: HPE) is a Texas-based multinational technology company founded in 1939. It is placed eighth on our list of 10 best cheap stocks to buy according to billionaire Mario Gabelli. Hewlett stock has returned more than 64% to investors over the past year. GAMCO Investors holds more than 1.4 million shares in the technology company worth over $23 million, representing 0.2% of their portfolio. GAMCO has trimmed their stake in the firm by over 10% since last year.
In quarterly earnings results posted on March 2, Hewlett Packard Enterprise Company (NYSE: HPE) reported earnings per share of $0.52 for the first three months of 2021, beating market expectations by $0.11. The revenue over the period was $6.8 billion.
At the end of the first quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Hewlett Packard Enterprise Company (NYSE: HPE), down from 30 in the previous quarter worth $923 million.
7. MSG Networks Inc. (NYSE: MSGN)
Number of Hedge Fund Holders: 18
MSG Networks Inc. (NYSE: MSGN) is a New York-based regional cable and satellite television network founded in 1969. It is ranked seventh on our list of 10 best cheap stocks to buy according to billionaire Mario Gabelli. MSG stock has returned more than 24% to investors during the course of the past twelve months. GAMCO Investors owns more than 1.6 million shares in the company worth over $24 million, representing 0.21% of their investment portfolio. GAMCO has trimmed their stake in the network by 4% in the past few months.
On May 7, MSG Networks Inc. (NYSE: MSGN) posted earnings results for the third fiscal quarter, reporting earnings per share of $0.78 that beat market expectations by $0.08. The revenue over the period was $177 million, down 3% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Ariel Investments is a leading shareholder in MSG Networks Inc. (NYSE: MSGN) with 8.5 million shares worth more than $28 million.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC), MSG Networks Inc. (NYSE: MSGN) is one of the best stocks to buy according to billionaire Mario Gabelli.
In its Q4 2020 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and MSG Networks Inc. (NYSE: MSGN) was one of them. Here is what the fund said:
“Shares of owner and operator of regional sports and entertainment networks, MSG Networks Inc. (MSGN) have also been impacted by the financial and operating implications surrounding the shortened NBA and NHL seasons. Investors have also been concerned about continued subscriber losses across Cable, Telco and Satellite video distributors, which has negative implications for affiliate revenue. On a positive note, the company recently reported fiscal Q4 earnings which exceeded expectations. The results were driven by lower expenses, as MSGN received media licensing relief on the portion of regular season games it did not end up televising. Operating expenses were also lower due to a reduction in advertising and marketing costs, as well as ad sales commissions. Over the long run, we believe MSGN’s rights agreement to broadcast Knicks and Rangers games through 2035 in the largest designated market area (DMA) in the country is valuable. Furthermore, NYC team fan bases are sticky and allegiances are typically passed down from generation to generation. We also highlight that despite ratings pressure across all professional sports leagues, sports content remains the most valuable type of content to advertisers because it is consumed live.”
6. Modine Manufacturing Company (NYSE: MOD)
Number of Hedge Fund Holders: 17
Modine Manufacturing Company (NYSE: MOD) is a Wisconsin-based thermal management company founded in 1916. It is placed sixth on our list of 10 best cheap stocks to buy according to billionaire Mario Gabelli. Modine stock has returned more than 223% to investors in the past year. The hedge fund managed by Gabelli owns more than 2.7 million shares in the thermal management company worth over $39 million, representing close to 0.35% of their portfolio. GAMCO has trimmed their stake in the firm by 3% since last year.
Modine Manufacturing Company (NYSE: MOD) posted earnings for the fourth fiscal quarter earlier this week, reporting earnings per share of $0.51, beating market estimates by $0.24. The revenue for the period was over $514 million.
At the end of the first quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $131 million in Modine Manufacturing Company (NYSE: MOD), down from 19 in the previous quarter worth $117 million.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC), Modine Manufacturing Company (NYSE: MOD) is one of the best stocks to buy according to billionaire Mario Gabelli.
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Disclosure: None. 10 Best Cheap Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.
