In this article, we discuss the 10 technology stocks to buy according to Mario Gabelli. If you want to skip our detailed analysis of these stocks, go directly to the 5 Technology Stocks to Buy According to Mario Gabelli.
Technology stocks have witnessed a period of explosive growth over the past year or so, mostly as a result of the pandemic and the digitization of business, but also a continuation of a growth trajectory that preceded COVID-19. Even value investing experts like Mario Gabelli, the chief of GAMCO Investors, have jumped aboard the growth train in recent months. Gabelli oversees more than $11.7 billion in assets at his hedge fund with the top holdings mostly in the consumer goods and finance sectors. However, he has been buying technology stocks as well.
According to the latest securities filings, the top ten holdings of the fund comprise 13.8% of the portfolio. GAMCO Investors has a turnover of 13.4% and Gabelli has won several accolades over his long career on Wall Street through a value investing strategy that was learned from legendary investors like Benjamin Graham and David Dodd. Gabelli has a net worth of close to $2 billion. The investor manages an incredibly diverse portfolio at GAMCO that reduced holdings in more than 400 stocks in the second quarter of 2021.
Some of the top stocks in the investment portfolio of GAMCO Investors at the end of the second quarter of 2021 were The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), among others. In a recent interview, Gabelli gave an indication of his future investments when he told finance platform Real Vision that battery technology was the great future of investing as clean energy and electric cars all required it.
Our Methodology
With this context in mind, here is our list of the 10 technology stocks to buy according to Mario Gabelli. These were ranked according to the investment portfolio of GAMCO Investors at the end of the second quarter of 2021. The list was compiled according to the value of each holding in the GAMCO portfolio.
The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions. The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why should we pay attention to Mario Gabelli’s stock picks? 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 July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). 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.
Technology Stocks to Buy According to Mario Gabelli
10. Take-Two Interactive Software, Inc. (NASDAQ: TTWO)
Number of Hedge Fund Holders: 55
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is placed tenth on our list of 10 technology stocks to buy according to Mario Gabelli. The company makes and sells interactive entertainment solutions and operates from New York. 13F filings reveal that GAMCO Investors owned 78,959 shares in the company at the end of the second quarter of 2021 worth $13 million, representing 0.11% of the portfolio.
On August 3, investment advisory Wedbush kept an Outperform rating on Take-Two Interactive Software, Inc. (NASDAQ: TTWO) stock and raised the price target to $222 from $212, appreciating the quarterly earnings results posted by the company.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Take-Two Interactive Software, Inc. (NASDAQ: TTWO) with 680,269 shares worth more than $120 million.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is one of the stocks in the portfolio of Mario Gabelli.
In its Q1 2020 investor letter, Sextant Mutual Funds, an asset management firm, highlighted a few stocks and Take-Two Interactive Software, Inc. (NASDAQ: TTWO) was one of them. Here is what the fund said:
“We mentioned the Xbox, but gamers also need games. We invested in Take-Two last year on the thesis that gaming demonstrates attractive long-term growth opportunities and online distribution would reduce costs and improve margins. With a ready-made excuse to spend eight hours in front of a screen in the basement, such online game delivery must have helped Take-Two.”
9. Facebook, Inc. (NASDAQ: FB)
Number of Hedge Fund Holders: 266
Facebook, Inc. (NASDAQ: FB) is ranked ninth on our list of 10 technology stocks to buy according to Mario Gabelli. The company owns and manages several social media platforms and is headquartered in California. According to securities filings, GAMCO Investors owned 48,677 shares in the company at the end June 2021 worth $16 million, representing 0.14% of the portfolio.
On July 29, investment advisory Truist maintained a Buy rating on Facebook, Inc. (NASDAQ: FB) stock and raised the price target to $425 from $400, noting the strong earnings of the firm are driven by rising advertising prices.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ: FB), up from 257 in the preceding quarter worth $40 billion.
Along with The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), Facebook, Inc. (NASDAQ: FB) is one of the stocks favored by Mario Gabelli.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ: FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
8. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ: INTC) is a California-based firm that markets essential technologies for smart devices. It is placed eighth on our list of 10 technology stocks to buy according to Mario Gabelli. According to the latest filings, GAMCO Investors owned 344,143 shares in the company at the end of the second quarter of 2021 worth $19 million, representing 0.16% of the portfolio.
On July 23, investment advisory BMO Capital kept an Outperform rating on Intel Corporation (NASDAQ: INTC) stock but lowered the price target to $70 from $75, noting that though margins were high, there was some compression expected in the second half of the year for the firm.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in Intel Corporation (NASDAQ: INTC), down from 83 in the previous quarter worth $7.6 billion.
7. Hewlett Packard Enterprise Company (NYSE: HPE)
Number of Hedge Fund Holders: 34
Hewlett Packard Enterprise Company (NYSE: HPE) is a Texas-based firm in the technology hardware, storage, and peripherals business. It is ranked seventh on our list of 10 technology stocks to buy according to Mario Gabelli. Regulatory filings show that GAMCO Investors owned 1.4 million shares in the company at the end of June 2021 worth $20 million, representing 0.17% of the portfolio.
On September 3, investment advisory Raymond James kept an Outperform rating on Hewlett Packard Enterprise Company (NYSE: HPE) stock and raised the price target to $22 from $20, noting the earnings beat and the improved cash flow outlook for the firm in the quarterly results.
At the end of the second quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.01 billion in Hewlett Packard Enterprise Company (NYSE: HPE), up from 27 in the previous quarter worth $1.06 billion.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT) are some of the stocks in the portfolio of Mario Gabelli, just like Hewlett Packard Enterprise Company (NYSE: HPE).
6. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ: AMZN) is placed sixth on our list of 10 technology stocks to buy according to Mario Gabelli. The firm operates as a diversified technology company and is headquartered in Washington. Latest data shows that GAMCO Investors owned 7,795 shares in the company at the end of the second quarter of 2021 worth $26 million, representing 0.22% of the portfolio.
On July 30, investment advisory JPMorgan kept an Overweight rating on Amazon.com, Inc. (NASDAQ: AMZN) stock but lowered the price target to $4100 from $4,600 after mixed quarterly earnings posted by the firm earlier in the month.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ: AMZN) with 3.8 million shares worth more than $13 billion.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT) are some of the best stocks in the portfolio of Mario Gabelli, along with Amazon.com, Inc. (NASDAQ: AMZN).
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ: AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN): We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment: 1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is in a much …”read the entire letter here]
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Disclosure. None. 10 Technology Stocks to Buy According to Mario Gabelli is originally published on Insider Monkey.
Correction: The previous version of this article incorrectly said that Citadel Investment Group is based in London. The article was corrected at 12:34 PM ET on September 17.
