In this article we discuss the 5 best cheap tech stocks to buy according to Mario Gabelli. If you want to read our detailed analysis of Gabelli‘s history, and hedge fund performance, go directly to the 10 Best Cheap Tech Stocks to Buy According to Mario Gabelli.
5. Park Aerospace Corp. (NYSE: PKE)
Number of Hedge Fund Holders: 8
Park Aerospace Corp. (NYSE: PKE) is a New York-based company that markets materials used by the telecommunications, internet infrastructure, high-end computing, and aerospace industries. It was founded in 1954 and is placed fifth on our list of 10 best cheap tech stocks to buy according to Mario Gabelli. GAMCO Investors owns 693,000 shares in the firm worth over $9.1 million, representing 0.08% of their portfolio. GAMCO has trimmed stakes in Park stock by 13% in the past few months.
On May 13, Park Aerospace Corp. (NYSE: PKE) posted earnings results for the fourth quarter, reporting earnings per share of $0.11 and a revenue of $14.4 million, down close to 7% compared to the revenue for the same period in the previous year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Park Aerospace Corp. (NYSE: PKE) with 1.4 million shares worth more than $18 million.
Just like Alphabet Inc. (NASDAQ: GOOG), Amazon.com, Inc. (NASDAQ: AMZN), and Apple Inc. (NASDAQ: AAPL), Park Aerospace Corp. (NYSE: PKE) is one of the best tech stocks to buy according to Mario Gabelli.
In its Q1 2020 investor letter, Huffman Prairie Holdings, an asset management firm, highlighted a few stocks and Park Aerospace Corp. (NYSE: PKE) was one of them. Here is what the fund said:
“We purchased shares in Park Aerospace Corp. (NYSE:PKE) in the second half of 2019. PKE is a growing aerospace business that manufactures advanced composite materials used in jet engines, commercial aircraft, military aircraft, business jets, space vehicles, and other specialized aerospace applications. PKE is a high-quality company run by a talented and well-aligned management team. Customers sign long-term, sole-source contracts with PKE to buy its proprietary composite materials. There was a clear line of sight to healthy growth in the business as contracted customers ramped production.
Fast forward a few months, this thesis clearly didn’t age well. The problem being that about 55% of PKE’s revenue comes from customers building new commercial airplanes. Suffice it to say that airlines will not be purchasing many new planes anytime soon. While PKE’s primary program – the Airbus A320 – may be somewhat insulated, PKE will undoubtedly experience substantial revenue declines in this line of business.
I have had the great fortune to work for some of the smartest small-cap investors operating today. Learning from them helped shape Huffman Prairie and in particular one key aspect of our risk management discipline. We will not invest in companies that combine considerable operational and financial risk. It is typically the ones that combine excessive amounts of both that cannot make it to the other side unscathed.
The aerospace and airline industries are prone to cycles of low (i.e., after 9/11) and high (i.e., the 2010s) demand. As a manufacturer, PKE invests ahead of demand and carries fixed capacity regardless of demand. If demand falls, PKE is left paying for underutilized facilities, machinery, and tooling. The performance and cash flows from operations will suffer and perhaps turn sharply negative.
We were well aware of the operational risk factors above late last year. PKE was deemed to have operational risk but that did not make it unsuitable for investment. PKE counterbalanced its operational risk by carrying almost zero financial risk. At year-end 2019, PKE had no debt and $144 million of cash on its balance sheet – an extraordinary position for a company worth $334 million as a whole at the time. With a Fort Knox balance sheet, PKE mitigates the risk of permanent capital loss and ensures that it will make it to the other side. Instead of facing an existential risk similar to many of its peers, shareholders in PKE can instead look through the nearterm haze and value expected cash flows in the years ahead.
Shares of PKE were down -17.5% in 1Q202 . Reporting such performance is typically not the fodder of investor letters but is noteworthy in this case compared to an average loss of -58.6% for other small cap aerospace OEM suppliers3 . Risk management is an often-overlooked component of running a concentrated fund. We would much rather talk about the companies with 50% or 100% upside! But we remain mindful that the substantial losers matter too and are what often derails the powerful math of compounded returns.”
4. TEGNA Inc. (NYSE: TGNA)
Number of Hedge Fund Holders: 20
TEGNA Inc. (NYSE: TGNA) is a Virginia-based company that focuses on digital media and marketing. It was founded in 2017 and is ranked fourth on our list of 10 best cheap tech stocks to buy according to Mario Gabelli. TEGNA stock has offered investors returns exceeding 65% in the past twelve months. The hedge fund run by Gabelli owns 549,300 shares in the company worth over $10.3 million, representing 0.09% of their portfolio. GAMCO Investors has trimmed their stake in the firm by close to half over the past few months.
On May 10, TEGNA Inc. (NYSE: TGNA) posted earnings for the first three months of 2021, reporting earnings per share of $0.52, beating market predictions by $0.03. The revenue over the period was over $727 million, up 6.3% year-on-year.
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $334 million in TEGNA Inc. (NYSE: TGNA), down from 34 in the preceding quarter worth $286 million.
3. IntriCon Corporation (NASDAQ: IIN)
Number of hedge fund holders: 3
IntriCon Corporation (NASDAQ: IIN) is a Minnesota-based company that makes micro-miniature components for the telecommunications, electronics, computer, and medical equipment industries. It was founded in 1930 and is placed third on our list of 10 best cheap tech stocks to buy according to Mario Gabelli. The company stock has returned more than 57% to investors over the course of the past twelve months. GAMCO Investors owns 497,000 shares in the firm worth over $12.7 million, representing 0.11% of their portfolio.
IntriCon Corporation (NASDAQ: IIN) reported quarterly earnings on May 10, posting earnings per share of $0.26 for the first three months of 2021, beating market predictions by $0.26. The revenue over the period was more than $31 million, up 47% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Royce & Associates is a leading shareholder in IntriCon Corporation (NASDAQ: IIN) with 1 million shares worth more than $26 million.
2. Hewlett Packard Enterprise Company (NYSE: HPE)
Number of Hedge Fund Holders: 27
Hewlett Packard Enterprise Company (NYSE: HPE) is a Texas-based technology company founded in 1939. It is ranked second on our list of 10 best cheap tech stocks to buy according to Mario Gabelli. The company stock has offered investors returns exceeding 64% in the last twelve months. The hedge fund that Gabelli oversees has more than 1.4 million shares in the firm worth over $23 million, representing 0.2% of their portfolio. GAMCO Investors has trimmed their stake in the famous technology company by over 10% since late last year.
Hewlett Packard Enterprise Company (NYSE: HPE) posted earnings results for the first quarter of 2021 earlier this month, reporting earnings per share of $0.52 that smashed market predictions by $0.11. The revenue for the first three months of 2021 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.
1. Diebold Nixdorf, Incorporated (NYSE: DBD)
Number of hedge fund holders: 19
Diebold Nixdorf, Incorporated (NYSE: DBD) is an Ohio-based technology company that specializes in financial services. It was founded in 1859 and is placed first on our list of 10 best cheap tech stocks to buy according to Mario Gabelli. Diebold stock has returned more than 183% over the past year. GAMCO Investors owns 3.7 million shares in the company that are worth over $53 million, representing 0.46% of their portfolio. The hedge fund has trimmed their holdings in the firm by 9% over the past few months.
In earnings results for the first three months of 2021, posted on May 10, Diebold Nixdorf, Incorporated (NYSE: DBD) reported earnings per share of $0.29, beating market estimates by $0.09. The revenue for the first quarter of 2021 was over $943 million.
Out of the hedge funds being tracked by Insider Monkey, California-based firm Beach Point Capital Management is a leading shareholder in Diebold Nixdorf, Incorporated (NYSE: DBD) with 3.4 million shares worth more than $48 million.
In its Q4 2020 investor letter, Roubaix Capital LLC, an asset management firm, highlighted a few stocks and Diebold Nixdorf, Incorporated (NYSE: DBD) was one of them. Here is what the fund said:
“The largest detractor in the short portfolio during the fourth quarter was Diebold Nixdorf (DBD). The company’s primary business is selling automated teller machines to banks. We view the cash ecosystem as a structural share loser and several companies in this ecosystem are on our short focus list. While electronic payments continue to consistently take share, and while there was some concern about using paper money during the health crisis, DBD was able to post reasonable results. The stock has carried a low valuation as many stocks do when they have secular pressure. This low valuation allowed the stock to rally alongside the market in Q4 and we exited on our risk discipline. We will continue to monitor this stock and others in this ecosystem for opportunities to re-short when the risk-reward is more favorable.”
You can also take a peek at 10 Blue Chip Dividend Stocks Hedge Funds Are Buying and 14 Best European Dividend Stocks To Buy.
