In this article, we discuss the 10 stocks that Mario Gabelli is selling.
Mario Gabelli is an Italian-American investor and hedge fund manager who founded GAMCO Investors in 1976, which is a New York-based hedge fund that offers brokerage services to mutual funds, institutional investors, and high net-worth individuals.
Mario Gabelli is an MBA graduate from Columbia Business School, and takes a keen interest in value investing. Although he is not an activist shareholder, his firm is the largest filer of 13D forms in America, which are used by investors if they want to register as active shareholders who can engage with company boards.
GAMCO Investors’ portfolio is worth $11.3 billion as per the 13F filings from Q3 2021, with investments concentrated in the industrials, information technology, finance, healthcare, consumer staples, consumer discretionary, and communications sectors, with a top ten holdings concentration of 15.03%.
In the third quarter of 2021, GAMCO Investors bought 57 new stocks, made additional purchases in 232 securities, sold out of 51 companies, and reduced holdings in 403 equities. The fund’s top buys for the period were General Motors Company (NYSE:GM), Madison Square Garden Entertainment Corp. (NYSE:MSGE), and Valmont Industries, Inc. (NYSE:VMI). Whereas, GAMCO Investors reduced holdings in Macquarie Infrastructure Holdings, LLC (NYSE:MIC), Edgewell Personal Care Company (NYSE:EPC), and Intel Corporation (NASDAQ:INTC).
The most notable stocks in Mario Gabelli’s Q3 2021 portfolio included American Express Company (NYSE:AXP), The Walt Disney Company (NYSE:DIS), and JPMorgan Chase & Co. (NYSE:JPM).
Our Methodology
We used Mario Gabelli’s Q3 2021 portfolio for this analysis, selecting the stocks that his hedge fund sold out of in the period. We have ranked the securities according to the hedge fund sentiment around each stock.
Mario Gabelli is Selling These Stocks
10. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 28
Kimberly-Clark Corporation (NYSE:KMB) is a Wisconsin-based multinational manufacturing corporation, dealing in sanitary paper products and medical instruments.
Mario Gabelli, via GAMCO Investors, started building a position in Kimberly-Clark Corporation back in Q3 2012, and held a stake in the company consistently before discarding the shares entirely in Q4 2018. Over the years, he bought and sold out of the stock repeatedly, and as of Q2 2021, his stake in Kimberly-Clark Corporation was valued at $200,000, which he disposed of in Q3 2021.
Kimberly-Clark Corporation declared on January 26 a $1.16 per share quarterly dividend, which is a 1.8% increase from its prior dividend of $1.14. The dividend is payable on April 4, for shareholders of record on March 4.
Publishing its Q4 results on January 26, Kimberly-Clark Corporation posted earnings per share of $1.30, beating estimates by $0.05. The $4.97 billion revenue also outperformed estimates by $62.87 million.
Barclays analyst Lauren Lieberman lowered the price target on Kimberly-Clark Corporation on January 28 to $127 from $148 and kept an Equal Weight rating on the shares. Kimberly-Clark Corporation is facing an inflationary cycle that is “broader and longer than any before,” the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 28 funds were bullish on Kimberly-Clark Corporation, down from 37 funds in the prior quarter. Holocene Advisors held the leading stake in Kimberly-Clark Corporation during the third quarter, with 945,712 shares worth $125.25 million.
9. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 30
Cummins Inc. (NYSE:CMI) is an American multinational company that designs and manufactures engines, filtration systems, fuel cell systems, turbochargers, and commercial vehicles for the heavy equipment and automotive industries.
GAMCO Investors first purchased shares of Cummins Inc. in Q3 2012, and kept its stake in the company consistently before selling off the shares in Q3 2015. In Q4 2020, the hedge fund invested in Cummins Inc. once again, and by Q2 2021, Mario Gabelli held 13,470 shares of the company, worth $3.28 million, which he discarded entirely in Q3 2021.
Cummins Inc. published its Q4 results on February 3, posting earnings per share of $2.73, missing estimates by $0.41. Revenue over the period totaled $5.85 billion, surpassing estimates by $43.05 million.
On February 8, Cummins Inc. declared a $1.45 per share quarterly dividend, in line with previous. The dividend is payable on March 3, to shareholders of record on February 18.
Deutsche Bank analyst Nicole DeBlase on December 10 lowered the price target on Cummins Inc. to $247 from $251 and kept a Hold rating on the shares. The analyst does not expect supply chain and price/cost headwinds to alleviate in the second half of 2022 for the multi-industry sector.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 30 hedge funds were bullish on Cummins Inc., down from 45 funds in the preceding quarter. First Eagle Investment Management held a leading stake in Cummins Inc. as of the close of the third quarter, with 1.94 million shares worth $437.3 million.
Mario Gabelli chose to sell his stake in Cummins Inc. heading into Q3 2021, unlike American Express Company, The Walt Disney Company, and JPMorgan Chase & Co., which still feature on his portfolio.
8. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 39
Parker-Hannifin Corporation (NYSE:PH) is an Ohio-based company designing motion and control technologies. Mizuho analyst Brett Linzey on December 16 initiated coverage of Parker-Hannifin Corporation with a Neutral rating and a $345 price target. The analyst sees “plenty to like” about the company’s long-term outlook but not enough near-term upside to warrant a Buy rating.
Mario Gabelli initially purchased shares of Parker-Hannifin Corporation in Q1 2014, before selling the stake off in Q4 2015. Over the years, he was inconsistent with his position in the company. In Q2 2021, he held 11,836 shares of Parker-Hannifin Corporation, worth $3.6 million, which he sold off entirely in Q3 2021.
On February 3, Parker-Hannifin Corporation reported earnings for Q4 2021. The company posted an EPS of $4.46, beating estimates by $0.53. Revenue over the period jumped 12.10% year-on-year, totaling $3.82 billion, outperforming estimates by $105.19 million.
Parker-Hannifin Corporation on January 27 declared a $1.03 per share quarterly dividend, in line with previous. The dividend is payable on March 4, for shareholders of record on February 11.
Among the hedge funds tracked by Insider Monkey, 39 hedge funds held long positions in Parker-Hannifin Corporation, down from 42 funds in the prior quarter. Viking Global is the leading stakeholder of the company, with more than 3 million shares worth $867 million.
Here is what Oakmark Funds has to say about Parker-Hannifin Corporation in their Q1 2021 investor letter:
“Parker Hannifin approached our estimates of intrinsic value and were, therefore, eliminated during the period. The company was a longstanding investment of the Fund and produced successful outcomes. We believe Parker Hannifin, one of our longest tenured positions, is a high-quality, well-managed industrial with strong competitive positions in good end markets. However, after the market price reflected these positives, we elected to sell to pursue more attractive alternatives that were priced at steeper discounts to our estimates of intrinsic value.”
7. CRISPR Therapeutics AG (NASDAQ:CRSP)
Number of Hedge Fund Holders: 43
CRISPR Therapeutics AG (NASDAQ:CRSP) is a Switzerland-based biotechnology company that focuses on treatments for sickle cell disease and rare blood disorders. Cowen analyst Tyler Van Buren on December 6 initiated coverage of CRISPR Therapeutics AG with a Market Perform rating.
CRISPR Therapeutics AG was a new arrival in Mario Gabelli’s Q2 2021 portfolio, with his hedge fund buying 3,100 shares of the company, worth $502,000. Gabelli discarded his CRISPR Therapeutics AG stake entirely heading into the third quarter of 2021.
According to the third quarter database Insider Monkey, 43 hedge funds were bullish on CRISPR Therapeutics AG, with stakes totaling $1.21 billion, as compared to 34 funds in the quarter earlier, holding stakes in CRISPR Therapeutics AG worth $1.76 billion. ARK Investment Management held the biggest stake in the company in Q3 2021, with 7.5 million shares worth $849 million.
6. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 53
General Electric Company (NYSE:GE) is a New York-based multinational conglomerate that manufactures aircrafts, engines, electrical distribution systems, electric motors, and wind turbines, among other products.
Mario Gabelli discarded his long-time position in General Electric Company in Q3 2021. He started building a stake in General Electric Company back in Q3 2012, and by the second quarter of 2021, he held a $4.1 million position in General Electric Company, before selling off his shares in the next quarter.
On January 25, General Electric Company published its Q4 results, posting an EPS of $0.92, exceeding estimates by $0.03. The $20.30 billion revenue dropped 7.41% year-over-year, missing market consensus estimates by $1 billion.
Deutsche Bank analyst Nicole DeBlase on January 27 lowered the price target on General Electric Company to $108 from $119 and kept a Buy rating on the shares. The analyst attributes the post-earnings selloff to weaker than expected segment income results and “noisy” 2022 earnings guidance. The analyst, however, continues to see significant upside based on her sum-of-the-parts analysis.
According to the Q3 database of Insider Monkey, 53 hedge funds were bullish on General Electric Company, down from 67 funds in the preceding quarter. Eagle Capital Management was a prominent stakeholder of the company, holding 13.6 million shares worth $1.40 billion.
General Electric Company is on the investment radar of the smart money, just like American Express Company, The Walt Disney Company, and JPMorgan Chase & Co..
Here is what Vulcan Value Partners has to say about General Electric Company in its Q3 2021 investor letter:
“During the quarter, we sold our positions in General Electric Co. General Electric is a company we followed for a long time. In the past, we removed GE from the MVP list due to management’s poor capital allocation decisions which resulted in value instability. Larry Culp, the former CEO of Danaher, became CEO of General Electric in 2018. The company implemented a vast restructuring program to simplify the industrial side of its business, sold off non-core assets, paid down debt with the proceeds, and drastically shrunk GE Capital. These restructuring activities allowed its world-class jet engine and healthcare businesses to shine through, and improved value stability. As a result, we added the company back to the MVP list. While the pandemic negatively impacted General Electric’s aviation business in the short run, it also gave us the opportunity to buy General Electric in the second quarter of 2020 with a substantial margin of safety. GE is a good example of a competitively entrenched, yet slower growing MVP business. As its stock price rose rapidly over the last year, its value growth did not keep up, and the price to value gap closed quickly. As our margin of safety diminished, we sold our position in GE and allocated it to more discounted companies.”
5. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 56
Zoom Video Communications, Inc. (NASDAQ:ZM) is a California-based communications technology that enables teleconferencing, telecommuting, remote work and education, and social relations.
In Q1 2021, Mario Gabelli purchased 2,596 shares of Zoom Video Communications, Inc., worth $834,000. He increased his stake in Zoom Video Communications, Inc. by roughly 10% in Q2, and in the third quarter of 2021, Mario Gabelli sold his $1.10 million position in the company.
Wells Fargo analyst Michael Turrin on December 13 lowered the price target on Zoom Video Communications, Inc. to $200 from $245 to reflect multiple compression across the software space. The analyst kept an Equal Weight rating on the shares.
Among the hedge funds tracked by Insider Monkey, 56 hedge funds were bullish on Zoom Video Communications, Inc., down from 59 funds in the quarter earlier. Tiger Global Management held the leading stake in Zoom Video Communications, Inc. as of Q3 2021, 4.76 million shares $1.24 billion.
Here is what Artisan Partners has to say about Zoom Video Communications, Inc. in its Q1 2021 investor letter:
“We concluded our campaigns in Zoom Video Communications. We have been paring our position in Zoom for several quarters, anticipating the reduced need for video conferencing as vaccination rates climb and people return to their workplaces. That said, we believe there is a strong case to be made that the pandemic has prompted a permanent inflection in video conferencing’s importance—sustainably higher remote work arrangements, more online learning and less business travel. Furthermore, the company’s dramatically expanded user base (up 485% YoY in Q3) positions it well to cross sell additional services, Zoom Phone in particular. The long-term future remains bright, but we decided to end our successful investment campaign in favor of opportunities in our pipeline with more attractive near-term growth prospects.”
4. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 57
Roku, Inc. (NASDAQ:ROKU) is a California-based consumer electronics and broadcast media company that offers advertising services to businesses as well. Mario Gabelli discarded his $956,000 stake in Roku, Inc. heading into Q3 2021.
Citi analyst Jason Bazinet lowered the price target on Roku, Inc. to $275 from $410 and kept a Buy rating on the shares. According to the analyst, subscriber-based stocks have come under significant pressure and the equity returns are lagging the S&P 500 Index since January 2020.
On February 2, Roku, Inc. announced that it is expanding its advertising business to Mexico, which will allow brands and content providers to reach more consumers through ad-supported content.
In Q3 2021, 57 hedge funds were bullish on Roku, Inc., with stakes totalling $2.82 billion, as compared to 61 funds in the quarter earlier, holding stakes in Roku, Inc. worth $5.6 billion. ARK Investment Management is the biggest stakeholder of Roku, Inc., with 4.73 million shares worth $1.48 billion.
Here is what LRT Capital Management has to say about Roku, Inc. in its Q3 2021 investor letter:
“Roku, Inc. (ROKU) – the streaming TV company is currently trading at the lowest valuation it has been in many years, despite reporting 50% revenue growth, and over 80% growth in its most important and profitable “Platform” segment. Ostensibly the risk of increased competition is weighing on the stock, in practice we believe Roku’s recent underperformance has more to do with it being the 4th largest holding in Cathy Wood’s ARKK ETF, which has been hammered by outflows in recent weeks. We wrote about Roku in our July Investor Letter.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) is an American electric vehicle maker and provider of clean and renewable energy. In the third quarter of 2021, 60 hedge funds were bullish on Tesla, Inc., holding stakes worth $10.6 billion. Coatue Management held a prominent stake in the company as of Q3 2021, with 1.12 million shares worth roughly $874 million.
Mario Gabelli first invested in Tesla, Inc. back in Q4 2015, and sold out of his shares entirely in Q3 2016. He again purchased Tesla, Inc. stock in Q1 2020, and discarded his position in the company in Q4 2020. In the second quarter of 2021, Gabelli bought a $442,000 stake in Tesla, Inc., which he disposed of in Q3 2021.
On January 26, Tesla, Inc. reported its Q4 results. The company’s EPS for the period came in at $2.54, beating estimates by $0.16. The Q4 revenue jumped about 65% year-on-year to $17.72 billion, surpassing estimates by $1.08 billion.
Morgan Stanley analyst Adam Jonas on February 7 noted that while most auto investors “still struggle” with the idea that Tesla, Inc. could ever be bigger than either General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F), he expects Tesla, Inc. revenues to be larger than the pair combined by 2027. The analyst has an Overweight rating and a $1,300 price target on Tesla, Inc. shares.
Here is what Alger Spectra Fund has to say about Tesla, Inc. in its Q4 2021 investor letter:
“Tesla is an electric vehicle (EV) manufacturer with a significant technology lead in its large and rapidly growing addressable market. Tesla is a consequential transportation company because it is setting the pace for industry innovation over the foreseeable future. It has potential to maintain its lead as it ramps up auto production and battery capacity. We are optimistic about EV innovation, adoption and Tesla’s growth prospects. The shares contributed to portfolio performance as Tesla successfully increased production of new model S and X units driving a richer revenue mix as the prices of these vehicles are higher and the cost to produce lower than earlier versions. Earnings estimates climbed for Tesla as pricing for vehicles in the backlog has increased. Further, as Tesla’s newer, more efficient factories increase production, unit costs may potentially decline relative.”
2. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 61
American Tower Corporation (NYSE:AMT) is a global real estate investment trust based in Boston, Massachusetts. Mario Gabelli has held a long-term position in American Tower Corporation, first buying shares of the company back in Q4 2016. In the second quarter of 2021, he owned 5,295 American Tower Corporation shares, worth $1.43 million, which he disposed of in Q3 2021.
On January 21, Deutsche Bank analyst Matthew Niknam lowered the price target on American Tower Corporation to $288 from $295 and kept a Hold rating on the shares. In light of a 10%-15% pullback to start 2022, the analyst believes tower stocks “screen increasingly attractive.”
American Tower Corporation on December 16 declared a $1.39 per share quarterly dividend, which is a 6.1% increase from its prior dividend of $1.31. The dividend was paid on January 14, to shareholders of record on December 27.
In Q3 2021, 61 hedge funds were bullish on American Tower Corporation, with stakes totaling $4.4 billion, as compared to 55 funds in the prior quarter, holding stakes in American Tower Corporation worth $4.7 billion. Akre Capital Management held the leading stake in the company as of the third quarter, with more than 7 million shares valued at $1.85 billion.
Here is what Qualivian Investment Partners has to say about American Tower Corporation in its Q3 2021 investor letter:
“What Attracts Us
Superior Business:
- High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
- Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.
− Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates
− 1%-2% churn
Superior Reinvestment Opportunities:
- Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
- Low maintenance capital expenditure requirements; most of capital expenditure is for growth
Superior Management / Capital Allocation:
- Capital reinvested back in business has had returns well above cost of capital
- Company has purchased stock opportunistically…” (Click here to see the full text)
1. Zillow Group, Inc. (NASDAQ:Z)
Number of Hedge Fund Holders: 67
Zillow Group, Inc. (NASDAQ:Z) is a Washington-based online real estate marketplace, offering services including buying, selling, renting, and financing for residential real estate establishments.
Mario Gabelli purchased a stake in Zillow Group, Inc. in Q3 2020, and by Q2 2021, he held a $232,000 position in the company, which he discarded entirely in the third quarter.
Jefferies analyst John Colantuoni assumed coverage of Zillow Group, Inc. on February 3 with a Buy rating and a price target of $75, down from $95. He believes Zillow Group, Inc.’s dominant share of traffic supports a further transition to flex pricing and provides ongoing monetization opportunities, which should help drive above-market growth and attractive free cash flow.
In the third quarter of 2021, 67 hedge funds were long Zillow Group, Inc., down from 76 funds in the preceding quarter. ARK Investment Management held the biggest stake in Zillow Group, Inc. as of Q3 2021, with 11.2 million shares worth approximately $995 million.
Here is what Baron Asset Fund has to say about Zillow Group, Inc. in its Q4 2021 investor letter:
“Real Estate investments detracted the most from relative performance, with real estate marketplace Zillow Group, Inc. accounting for all of the weakness. Zillow unexpectedly announced that it was exiting its home buying business, as it became apparent that the company had overpaid for many homes. We were surprised and disappointed by these developments and decided to exit our position in the company.
Zillow Group, Inc. operates the leading residential real estate websites in the U.S. In 2018, Zillow entered the iBuying market through its Zillow Offers unit, which purchased and resold homes, while also providing title, escrow, and mortgage services. By 2020, Zillow Offers had grown rapidly, was available in 25 markets and generated $1.7 billion in revenues. We were excited by the rapid growth in this business segment, and we believed that it could become a significant contributor to Zillow’s overall profitability. In November 2021, Zillow unexpectedly announced that it was exiting the home business, as it became apparent that the company had overpaid for a large number of homes, leading to a $500 million write-off. Their explanation for this shocking development was that the valuation algorithms they had developed had made dramatic errors. We were surprised and disappointed by these developments, which caused us to lose conviction in the company’s management and strategy. We exited the position during the quarter.”
You can also take a look at 10 Best Value Stocks in Warren Buffett’s Portfolio and 10 Financial Stocks to Buy According to Ken Griffin’s Citadel Investment Group.
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This article is originally published at Insider Monkey.
