In this article, we discuss the 10 undervalued stocks to buy according to billionaire Mario Gabelli. If you want to skip our detailed analysis of these stocks, go directly to the 5 Undervalued Stocks to Buy According to Billionaire Mario Gabelli.
Mario Gabelli of GAMCO Investors is a true veteran of the stock market. Gabelli, now almost 80-years-old, has dabbled in the finance industry since the tender age of thirteen when he bought his first stock. Back then, Gabelli made money through a shoe-shine stall at the Bronx subway station in New York. The investor went on to attend business school from these humble beginnings, graduating from the Fordham College of Business Administration in 1965. In 1977, Gabelli founded GAMCO Investors, one of the most successful investment firms in the US.
The personal net worth of Gabelli is close to $2 billion. The founder of GAMCO Investors built his fortune by betting big on media and telecom stocks and then complementing that success with a focus on value. One of these value strategies revolves around taking over a struggling public firm to overhaul and then sell for a profit. Gabelli has also made solid bets on several undervalued stocks in the past few years that have paid his fund handsome dividends. As interest rates rise, his under-the-radar value investing strategy is winning more admirers.
The portfolio value of GAMCO Investors at the end of December 2021 was around $11.3 billion. During the fourth quarter of 2021, the fund made new purchases in 63 stocks, additional purchases in 235, sold out of 65, and reduced holdings in 406 stocks. Some of the top stocks in the portfolio of GAMCO Investors at the end of December 2021 included The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC).
Gabelli Bullish on Auto, Fuel, and Food
Gabelli has an active presence on social networking platform Twitter but generally only uses it to share latest market news with his followers, refraining from publicly commenting on his investments. However, in an interview with news platform Bloomberg in early March, the billionaire hinted at increased mergers and acquisitions at the market, outlining that he saw “horizontal and vertical merger and acquisition environment” as a new regulatory regime took control in the United States.
In January this year, Gabelli had also outlined his bullish stance towards the auto industry, detailing on news platform CNBC that he liked car stocks in 2022 as companies aimed to ramp up production to meet high demand. He also said that fuel and food would dominate the market this year, urging investors to pile up on energy and fertilizer stocks. According to Gabelli, 2022 would be dominated by the removal of stimulus by the Fed on one hand and rising corporate earnings on the other.
Our Methodology
The companies listed below were picked from the investment portfolio of GAMCO Investors at the end of the fourth quarter of 2021. The stocks that have a Price-to-Earning (PE) Ratio below 20 were preferred for the list. The PE Ratio of each stock is mentioned alongside other details about the firms below to provide further context for readers.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Undervalued Stocks to Buy According to Billionaire Mario Gabelli
10. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 36
PE Ratio: 18.56
General Mills, Inc. (NYSE:GIS) markets branded consumer foods. Elite hedge funds are bullish on the stock. Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in General Mills, Inc. (NYSE:GIS) with 4.3 million shares worth more than $289 million.
According to the latest filings, GAMCO Investors owned over 599,000 shares of General Mills, Inc. (NYSE:GIS) at the end of the fourth quarter of 2021 worth $40.4 million, representing 0.34% of the portfolio.
Just like The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC), General Mills, Inc. (NYSE:GIS) is one of the stocks in the spotlight as inflation batters the market.
In its Q3 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and General Mills, Inc. (NYSE:GIS) was one of them. Here is what the fund said:
“In the 1970s, blackout rules prevented televising NFL home games that weren’t sold out. It was always uncertain whether or not the Minnesota Vikings’ games would be televised. I remember how excited I’d be each week hearing that General Mills, Inc. (NYSE:GIS) had purchased the remaining tickets, allowing the game to be on TV. Some said General Mills did this for its stakeholders—its employees and community—as opposed to maximizing profits for its shareholders. I believe stakeholders and shareholders both benefitted.
Consider the long-term benefits of General Mills, Inc. (NYSE:GIS) being the hero that let us watch those games. It made employees proud of their employer and maybe helped with talent acquisition. The thousands of disadvantaged kids who got to attend NFL games were perhaps more likely to become General Mills customers or employees. And across the state, maybe we were all more likely to buy Betty Crocker cake mix instead of Duncan Hines. While the tickets were purchased in the name of being a good corporate citizen, I believe it was the most effective marketing ever done by General Mills and clearly benefitted the company’s shareholders.
Would Friedman argue against this spending because it reduced profits? Absolutely not. His writing from more than 40 years ago sounds eerily timely: “In the present climate of opinion, with its widespread aversion to ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.
General Mills, Inc. (NYSE:GIS) accepted lower short-term profits in its pursuit of higher long-term value. And the stakeholders also benefitted. In The Heart of Capitalism, Joly states that “shareholder or stakeholder” tradeoffs are artificial because an “and” solution often exists. “We maximize performance not by choosing between stakeholders, but by embracing all of them. We choose employees and customers and shareholders and the community.” Joly cites examples from his time at Best Buy, including reducing its carbon footprint by installing LED lights throughout the stores. “This helps the environment and helped us save money on our energy consumption. Again, not a zero-sum game.”
9. Edgewell Personal Care Company (NYSE:EPC)
Number of Hedge Fund Holders: 22
PE Ratio: 17.74
Edgewell Personal Care Company (NYSE:EPC) makes and sells personal care products. Latest data shows that GAMCO Investors owned more than 1.7 million shares of the company at the end of the fourth quarter of 2021 worth over $81.6 million, representing 0.69% of the portfolio.
Edgewell Personal Care Company (NYSE:EPC) has attracted the interest of major hedge funds in recent months. Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Edgewell Personal Care Company (NYSE:EPC) with 243,556 shares worth more than $11 million.
8. Griffon Corporation (NYSE:GFF)
Number of Hedge Fund Holders: 12
PE Ratio: 17.68
Griffon Corporation (NYSE:GFF) provides home and building products. The hedge fund sentiment around the stock is positive. At the end of the fourth quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $192 million in Griffon Corporation (NYSE:GFF), compared to 11 in the preceding quarter worth $156 million.
Regulatory filings show that GAMCO Investors owned more than 3.6 million shares of Griffon Corporation (NYSE:GFF) at the end of December 2021 worth $104 million, representing 0.89% of the portfolio.
7. Evergy, Inc. (NYSE:EVRG)
Number of Hedge Fund Holders: 25
PE Ratio: 16.62
Evergy, Inc. (NYSE:EVRG) is a Missouri-based electric utilities firm. Securities filings reveal that GAMCO Investors owned over 574,000 shares of the company at the end of December 2021 worth $39.4 million, representing 0.33% of the portfolio.
Evergy, Inc. (NYSE:EVRG) is one of the top utilities stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, New York-based firm Elliott Management is a leading shareholder in Evergy, Inc. (NYSE:EVRG) with 9.4 million shares worth more than $646 million.
6. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders:
PE Ratio: 16.33
Freeport-McMoRan Inc. (NYSE:FCX) is a mining firm based in Arizona. Top hedge funds hold large stakes in the company. At the end of the fourth quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in Freeport-McMoRan Inc. (NYSE:FCX), the same as in the preceding quarter worth $3.2 billion.
The hedge fund of Mario Gabelli entered the first quarter of 2022 with over 1.3 million shares of Freeport-McMoRan Inc. (NYSE:FCX) in the portfolio worth more than $56 million, representing 0.48% of the portfolio.
In addition to The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Wells Fargo & Company (NYSE:WFC), Freeport-McMoRan Inc. (NYSE:FCX) is one of the stocks on the radar of institutional investors.
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Disclosure. None. 10 Undervalued Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.
