In this article, we present the list of top 10 stock picks of Mario Gabelli’s GAMCO Investors at the end of the second quarter. If you want to skip the fund’s history, recent performance and details about its overall portfolio, please go directly to 5 Best Stocks to Buy According to Billionaire Mario Gabelli.
It would be rare for a seasoned investor to be unaware of billionaire Mario Gabelli and his iconic asset management firm GAMCO Investors. With close to 5 decades of history, GAMCO Investors is considered one of the giants in the mutual funds and asset management industry. Mr. Gabelli also commands massive respect on the Street due to his decades-long investment career and a track record of delivering outsized gains to his investors.
When he was young, Mr. Gabelli read market reports just for fun and purchased his first stock when he was only 13. He graduated summa cum laude with a bachelor’s of science in accounting from Fordham University in 1965, following which, in 1967, he got an MBA from Columbia Business School. At Columbia, his teachers included Roger Murray, a noted professor and value investing proponent who co-authored the fifth edition of the investment classic ‘Security Analysis.’
Mr. Gabelli worked as an investment analyst at Loeb, Rhoades & Co. before starting Gabelli & Co., an institutional brokerage house, in 1976. A few years after founding Gabelli & Co., he founded Gabelli Investors, which went public in 1999 and changed its name to GAMCO Investors in 2005. Currently, GAMCO Investors runs multiple mutual, closed-ended, and money market funds along with several ETFs.
GAMCO Investors’ Portfolio
According to GAMCO Investors’ last quarterly earnings release, the firm managed $28.7 billion of capital at the end of June. During the second quarter, the value of the firm’s 13F portfolio declined to $9.121 billion from $11.08 billion. In that period, GAMCO Investors reduced its holdings in 427 stocks and made additional purchases in 206 stocks. It also initiated a stake in 39 companies and sold its entire stake in 55 companies during Q2. The top 10 stock picks of GAMCO Investors at the end of June, some of which have been a part of the firm’s 13F portfolio for many years, included GATX Corporation (NYSE:GATX), Sony Group Corporation (NYSE:SONY), and Mueller Industries, Inc. (NYSE:MLI).
Our Methodology
At Insider Monkey, we cover the portfolios of 895 hedge funds, closely tracking the stocks they buy and sell. We selected the ten stocks discussed in this article based on the 13F regulatory filing submitted by GAMCO Investors with the SEC for the quarter ending June 30. These are the top ten stocks picks from Gabelli’s latest portfolio.
10 Best Stocks to Buy According to Billionaire Mario Gabelli
10. Republic Services, Inc. (NYSE:RSG)
GAMCO Investors’ Stake Value: $105,433,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.15%
Number of Hedge Fund Holders: 33
Founded in 1996, Republic Services, Inc. (NYSE:RSG) offers environmental services across the United States. In the last 10 years, shares of Republic Services, Inc. (NYSE:RSG) have seen a steady and consistent uptrend and recently made their lifetime high of $148.26. GAMCO Investors has been a long-term stockholder, having reported a stake in the company for the first time in Q1 of 2001. Other funds that disclosed a stake in Republic Services, Inc. (NYSE:RSG) at the end of June included Ian Simm’s Impax Asset Management, which owned 1.33 million shares and billionaire Cliff Asness’ AQR Capital Management, which held 919,202 shares.
On August 4, Republic Services, Inc. (NYSE:RSG) announced its fiscal 2022 second-quarter numbers, reporting non-GAAP EPS of $1.32 on revenue of $3.41 billion, both of which beat analysts’ expectations by $0.14 and $110 million, respectively. Along with the earnings release, the company also revealed that it is increasing its quarterly dividend by 7.6% to $0.495 per share. Republic Services, Inc. (NYSE:RSG) has increased its dividend every year in the last 18 years. Extrapolating its current quarterly dividend, the company pays an annual dividend of $1.98 per share, which translates to a 1.35% forward dividend yield based on its current stock price.
9. Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD)
GAMCO Investors’ Stake Value: $112,456,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.23%
Number of Hedge Fund Holders: 26
The popularity of Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) among hedge funds tracked by Insider Monkey has declined every quarter over the previous year. Only 26 hedge funds in our database reported a stake in the company at the end of June this year, nine less than the 35 funds that disclosed holding a stake during the same time last year. However, GAMCO Investors remain bullish on the stock as it upped its stake in the company marginally by 3% to 2.77 million shares during the second quarter.
The control of Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) was recently subject to a high-profile drama between its executives. Warren Lichtenstein, an activist investor and ex-executive chairman of Aerojet Rocketdyne Holdings, Inc.’s (NYSE:AJRD) board and Eileen Drake, the company’s CEO, were embroiled in a bitter battle over who gets to control the company and its board. That battle ended on June 30 when Ms. Drake won the proxy fight with an overwhelming majority, and Mr. Lichtenstein resigned from the board.
8. Textron Inc. (NYSE:TXT)
GAMCO Investors’ Stake Value: $113,348,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.24%
Number of Hedge Fund Holders: 23
Though Textron Inc.’s (NYSE:TXT) stock has fallen by only 9% in the last one year, its popularity among smart money investors has seen a considerable decline during that period. Funds tracked by Insider Monkey that reported a stake in the aerospace and defense company at the end of June declined to 27 from 35 year-over-year.
In April this year, Textron Inc. (NYSE:TXT) completed the acquisition of Slovenia-based Pipistrel, which it had announced a month earlier. Pipistrel designs and manufactures small planes, and its ‘Velis Electro’ aircraft is currently the only electric aircraft in the world that has received a full type-certification from the European Union Aviation Safety Agency (EASA). Textron Inc. (NYSE:TXT) acquired Pipistrel in an all-cash deal that valued the latter at $285 million.
At the end of last month, analysts at Susquehanna Bancshares reduced their price target on Textron Inc.’s (NYSE:TXT) stock to $84 from 490 while maintaining their ‘Positive’ rating.
7. CNH Industrial N.V. (NYSE:CNHI)
GAMCO Investors’ Stake Value: $113,946,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.24%
Number of Hedge Fund Holders: 25
CNH Industrial N.V. (NYSE:CNHI) recently made it to Insider Monkey’s list of 10 Best Agriculture Stocks To Invest In and 12 Biggest Agriculture Companies in the World. Shares of CNH Industrial N.V. (NYSE:CNHI) have fallen by more than 25% year to date. However, many analysts believe that this recent decline in stock has made it an even stronger buy as it currently trades at a forward price to earnings multiple of only 9.05.
On July 29, along with its second-quarter earnings release, CNH Industrial N.V. (NYSE:CNHI) announced that its board had approved an additional $300 million share buyback program which will commence after the completion of the company’s existing $100 million buyback program. For its fiscal 2022 second quarter, CNH Industrial N.V. (NYSE:CNHI) reported non-GAAP earnings per share of $0.43 on revenue of $6.08 billion, beating analysts’ expectations by $0.06 and $510 million, respectively.
6. American Express Company (NYSE:AXP)
GAMCO Investors’ Stake Value: $118,725,000
Percentage of GAMCO Investors’ 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 67
GAMCO Investors reduced its stake in American Express Company (NYSE:AXP) marginally by 2% during the second quarter to 856,475 shares. Other hedge funds tracked by Insider Monkey that also reduced their holdings in the company marginally during the same period included Jean-Marie Eveillard’s First Eagle Investment Management and billionaire Ken Fisher’s Fisher Asset Management. While First Eagle Investment Management reduced its stake by 1% to 3.24 million shares, Fisher Asset Management sold 3% of its stake and brought its holdings in the company down to 15.35 million shares.
According to American Express Company’s (NYSE:AXP) recently-submitted card disclosure filing, it only saw 0.7% consumer card delinquencies in July, 0.1% more than what it reported for the same month last year and unchanged from June 2022. The credit card delinquency data reported by card issuing companies serve as an important measure of consumer sentiment. Following the credit card data released by the eight card issuing companies in the US, Wolfe Research analyst Bill Carcache released a note to clients highlighting:
“We expect DQ rate formations to remain on an up-and-to-the-right trajectory as the Fed proceeds through the hiking cycle and believe the lines between normalization and degradation are likely to blur in the months ahead as initial claims continue to rise”
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Disclosure: None. 10 Best Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.
