Billionaire Mario Gabelli of GAMCO Investors is arguably one of the most revered value investors on Wall Street today. GAMCO Investors recently filed its 13F with the SEC for the June 30 reporting period. According to the filing, GAMCO Investors’ public equity portfolio was worth almost $18.5 billion at the end of June and its top ten holdings accounted for 13.69% of that value. The filing also revealed that as usual, Gabelli focused on consumer discretionary and industrial sector stocks, which constituted 30% and 24% of his equity portfolio respectively. His top holding remained unchanged during the second quarter, as DIRECTV (NASDAQ:DTV) remained his top pick, but Mr. Gabelli cut his exposure to most of his top positions, including DIRECTV. Therefore, in this article we are going to take a look at the top three positions of Gabelli’s in which the investor raised his stake during the April – June period. Those positions are Bank of New York Mellon Corp (NYSE:BK), Ryman Hospitality Properties Inc (NYSE:RHP), and Sony Corp (ADR)(NYSE:SNE).
Mr. Gabelli started his career on Wall Street at Loeb, Rhoades & Co. as a security analyst after completing his Master of Business Administration degree from Columbia Business School. In 1976 he started Gabelli & Co., primarily as a broker/dealer and later established GAMCO Investors to manage money for his clients. From $33 million in assets under management (AUM) in 1981, the fund grew to $16.3 billion by 1999 and now manages around $30 billion of wealth. Gabelli is one of the early proponents and one of the most successful followers of the Graham-Dodd school of security analysis. The Private Market Value methodology he devised is now widely followed by value investors.
But let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by 65 percentage points, returning over 123% (read more details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
Follow Mario J. Gabelli's GAMCO Investors
GAMCO Investors increased its stake in Bank of New York Mellon Corp (NYSE:BK) by 1% or 119,785 shares during the second quarter. At the end of June, Bank of New York Mellon Corp (NYSE:BK) represented GAMCO Investors second-largest holding, as the firm held a stake of over 6.68 million shares worth $280.48 million. Bank of New York Mellon Corp (NYSE:BK)’s stock gained some 5% during the second quarter and is up by 9.14% year-to-date. The company has been on the radars of other top investors lately as well. During the first quarter, billionaire David Einhorn’s Greenlight Capital initiated a stake in Bank of New York Mellon Corp (NYSE:BK), buying 330,901 shares. Moreover, the company has witnessed the involvement of two activists recently: Richard McGuire of Marcato Capital Management and Nelson Peltz of Trian Partners. Peltz has been trying to pressure the bank to cut down its costs and spin-off its custody business, and managed to get a seat on the Board last year. Meanwhile, McGuire initiated a stake in Bank of New York Mellon Corp (NYSE:BK) during the first quarter and since then has been very vocal about how the bank needs to bring employee strength down and needs to replace its Chairman and CEO Gerald Hassel. At the end of March, Trian held 30.23 million shares of Bank of New York Mellon, while Marcato owned 18.36 million shares.
GAMCO increased its stake in its largest small-cap bet, Ryman Hospitality Properties Inc (NYSE:RHP), by a relatively insignificant 20,041 shares to 5.03 million shares, or almost 10% of Ryman Hospitality Properties Inc (NYSE:RHP) common shares, with them being worth $267.2 million. On August 4, the Nashville, Tennessee-based hotel and resort REIT reported its second quarter results. The EPS for the quarter of $1.45 came in-line with analysts’ expectations, while the revenue of $274 million came in a tad below analysts’ consensus estimate of $274.05 million, though essentially in-line as well. In a research note published on August 6, analysts at JPMorgan Chase & Co reduced their price target on the stock to $60 from $61. David E. Shaw‘s D E Shaw increased its stake in Ryman Hospitality Properties Inc (NYSE:RHP) by 11% to over 400,000 shares during the first quarter of the year.
Moving on to GAMCO Investors’ third top pick with bullish action on it, Sony Corp (ADR) (NYSE:SNE). The fund increased its stake in the electronics giant by 3% or 185,360 shares during the April-June period, holding over 6.2 million shares of the company valued at nearly $176.42 million as of June 30. On July 30, the company reported its fiscal first quarter 2015 earnings for the period ended June 30. Although profits for the quarter tripled year-over-year to $676 million and net profit rose significantly to $794 million, its shares have still taken a big beating since then, as the company reported that its prominent movie-making and publishing arm, Sony Pictures has begun losing money. In the last few years the company has been struggling to get its past glory back. However, one segment in which it remains unbeaten is gaming consoles, where its PlayStation 4 had sales of 3 million this spring, more than double the sales of Xbox One and Xbox 360 combined. According to recent reports, the company is partnering with Japanese robotics company ZMP to create Aerosense, a drone company. Among the hedge funds we track, GAMCO Investors was the largest shareholder of Sony Corp (ADR) (NYSE:SNE) at the end of the first-quarter, followed by Jim Simons‘ Renaissance Technologies, which owned over 2.6 million shares.
Disclosure: None
