In this article, we discuss the 5 stocks Mario Gabelli is dumping. If you want to read our detailed analysis of these stocks, go directly to Mario Gabelli is Dumping These 15 Stocks.
5. Pinnacle West Capital Corporation (NYSE: PNW)
Number of Hedge Fund Holders: 18
Percentage Decline in Stake in Q2: 59%
Pinnacle West Capital Corporation (NYSE: PNW) is ranked fifth on our list of 15 stocks Mario Gabelli is dumping. The firm provides electric services and operates from Arizona. Government filings show that GAMCO Investors owned 3,500 shares in the company at the end of the second quarter of 2021 worth $287,000.
On August 19, investment advisory Goldman Sachs downgraded Pinnacle West Capital Corporation (NYSE: PNW) stock to Sell from Neutral and lowered the price target to $73 from $85, highlighting that a challenging regulatory environment could weigh on the firm.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Pinnacle West Capital Corporation (NYSE: PNW) with 642,112 shares worth more than $52 million.
4. Big 5 Sporting Goods Corporation (NASDAQ: BGFV)
Number of Hedge Fund Holders: 19
Percentage Decline in Stake in Q2: 65%
Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a California-based sporting goods retailer. It is placed fourth on our list of 15 stocks Mario Gabelli is dumping. Latest filings reveal that GAMCO Investors owned 66,300 shares in the company at the end of June 2021 worth $1.7 million.
On August 4, investment advisory Lake Street maintained a Buy rating on Big 5 Sporting Goods Corporation (NASDAQ: BGFV) stock and raised the price target to $31 from $26, underlining that the demand environment for the company remained robust.
Out of the hedge funds being tracked by Insider Monkey, Texas-based investment firm Lonestar Capital Management is a leading shareholder in Big 5 Sporting Goods Corporation (NASDAQ: BGFV) with 376,494 shares worth more than $9.6 million.
3. Bentley Systems, Incorporated (NASDAQ: BSY)
Number of Hedge Fund Holders: 17
Percentage Decline in Stake in Q2: 69%
Bentley Systems, Incorporated (NASDAQ: BSY) is a Pennsylvania-based firm that markets infrastructure engineering solutions. It is ranked third on our list of 15 stocks Mario Gabelli is dumping. Regulatory filings reveal that GAMCO Investors owned 40,000 shares in the company at the end of the second quarter of 2021 worth $2.5 million.
On August 11, investment advisory RBC Capital reiterated an Outperform rating on Bentley Systems, Incorporated (NASDAQ: BSY) stock and raised the price target to $74 from $70, appreciating the strong second quarter earnings beat of the firm.
At the end of the second quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $81 million in Bentley Systems, Incorporated (NASDAQ: BSY), down from 22 in the preceding quarter worth $109 million.
In its Q2 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Bentley Systems, Incorporated (NASDAQ: BSY) was one of them. Here is what the fund said:
“Bentley Systems is a founder-led company with a 36-year track record of creating value with software and services for the design, construction and operation of infrastructure, such as transportation, energy generation, large commercial buildings and other physical assets. The company’s software solutions help bring projects to market faster and more efficiently and include a simulation offering that provides asset owners with valuable information to prolong and improve the life of assets. Penetration of digital workflow in infrastructure engineering remains low and both the project and asset management markets are continuing to adopt digital solutions, driving growth for Bentley at a high single-digit rate and potentially accelerating in the event of a U.S. infrastructure bill being passed into law. We believe that anticipation of a U.S. infrastructure bill is one of the main reasons why Bentley Systems shares outperformed in the second quarter. We believe the company’s acquisition of geosciences software company Seequent also supported the performance of Bentley shares because it provides increased potential for the company to increase its guidance when reporting second quarter results in August.”
2. Newell Brands Inc. (NASDAQ: NWL)
Number of Hedge Fund Holders: 25
Percentage Decline in Stake in Q2: 73%
Newell Brands Inc. (NASDAQ: NWL) is placed second on our list of 15 stocks Mario Gabelli is dumping. The company markets household products and operates from Georgia. According to the latest data, GAMCO Investors owned 7,500 shares in the firm at the end of the second quarter of 2021 worth $206,000.
On August 2, investment advisory Wells Fargo upgraded Newell Brands Inc. (NASDAQ: NWL) stock to Equal Weight from Underweight and raised the price target to $26 from $23, noting that the advisory was not sure that the upgrade cycle for the firm was over.
At the end of the second quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Newell Brands Inc. (NASDAQ: NWL), up from 24 in the previous quarter worth $1.9 billion.
1. Fiserv, Inc. (NASDAQ: FISV)
Number of Hedge Fund Holders: 72
Percentage Decline in Stake in Q2: 92%
Fiserv, Inc. (NASDAQ: FISV) is ranked first on our list of 15 stocks Mario Gabelli is dumping. The firm provides financial technology services and is based in Wisconsin. Regulatory filings reveal that GAMCO Investors owned 2,139 shares in the firm at the end of June 2021 worth $229,000.
On August 17, investment advisory JPMorgan maintained an Overweight rating on Fiserv, Inc. (NASDAQ: FISV) stock and raised the price target to $145 from $142, noting that modern players in the payments sector were outperforming.
At the end of the second quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Fiserv, Inc. (NASDAQ: FISV), down from 75 the preceding quarter worth $2.7 billion.
In its Q1 2021 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ: FISV) was one of them. Here is what the fund said:
“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.
Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future.
In addition to Fiserv’s favorable business characteristics and competitive positioning, the management team, led by CEO Frank Bisignano, has a track record of successfully investing for growth, improving profitability, and intelligently allocating excess capital. We believe these value-creating activities will continue going forward.
Financial institutions are increasingly making investments to digitize their customer facing products and digital payments are increasingly taking share from cash as a form of payment. As a result, demand for Fiserv’s solutions, should continue to grow nicely in the coming years. In our view, Fiserv offers a nice combination of above average growth, high profitability, business resiliency, and shareholder-friendly management. We do not believe these characteristics were fully reflected in Fiserv’s share price when we made our investment during the quarter at a discount to the market’s 2021 price-to-earnings (P/E) multiple, a valuation level well below Fiserv’s historical premium.
An offsetting trade was the sale of Cognizant Technology Solutions, which was sold around the time Fiserv was added to the portfolio. Cognizant had been held since 2018, and we had expected it to perform similarly to another portfolio holding in the same industry, Accenture. Alas, multiple years of below industry growth challenged the investment, and despite our belief that CEO Brian Humphries could materially improve operations, recent metrics regarding elevated employee turnover and still below-average revenue growth led us to conclude that there was more heavy lifting required at the company. We decided that our investors would be better served by being invested in Fiserv rather than Cognizant.”
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