In this article, we discuss the 5 stocks that Mario Gabelli is selling. If you want our detailed analysis of Gabelli’s history, investment philosophy, and hedge fund performance, go directly to Mario Gabelli is Selling These 10 Stocks.
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. (NASDAQ:ZM), worth $834,000. He increased his stake in Zoom Video Communications, Inc. (NASDAQ:ZM) 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. (NASDAQ:ZM) 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. (NASDAQ:ZM), down from 59 funds in the quarter earlier. Tiger Global Management held the leading stake in Zoom Video Communications, Inc. (NASDAQ:ZM) as of Q3 2021, 4.76 million shares $1.24 billion.
Here is what Artisan Partners has to say about Zoom Video Communications, Inc. (NASDAQ:ZM) 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. (NASDAQ:ROKU) heading into Q3 2021.
Citi analyst Jason Bazinet lowered the price target on Roku, Inc. (NASDAQ:ROKU) 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. (NASDAQ:ROKU) 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. (NASDAQ:ROKU), with stakes totalling $2.82 billion, as compared to 61 funds in the quarter earlier, holding stakes in Roku, Inc. (NASDAQ:ROKU) worth $5.6 billion. ARK Investment Management is the biggest stakeholder of Roku, Inc. (NASDAQ:ROKU), with 4.73 million shares worth $1.48 billion.
Here is what LRT Capital Management has to say about Roku, Inc. (NASDAQ:ROKU) 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. (NASDAQ:TSLA), 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. (NASDAQ:TSLA) back in Q4 2015, and sold out of his shares entirely in Q3 2016. He again purchased Tesla, Inc. (NASDAQ:TSLA) 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. (NASDAQ:TSLA), which he disposed of in Q3 2021.
On January 26, Tesla, Inc. (NASDAQ:TSLA) 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. (NASDAQ:TSLA) could ever be bigger than either General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F), he expects Tesla, Inc. (NASDAQ:TSLA) 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. (NASDAQ:TSLA) shares.
Here is what Alger Spectra Fund has to say about Tesla, Inc. (NASDAQ:TSLA) 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 (NYSE:AMT), first buying shares of the company back in Q4 2016. In the second quarter of 2021, he owned 5,295 American Tower Corporation (NYSE:AMT) 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 (NYSE:AMT) 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 (NYSE:AMT) 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 (NYSE:AMT), with stakes totaling $4.4 billion, as compared to 55 funds in the prior quarter, holding stakes in American Tower Corporation (NYSE:AMT) 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 (NYSE:AMT) 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. (NASDAQ:Z) 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. (NASDAQ:Z) on February 3 with a Buy rating and a price target of $75, down from $95. He believes Zillow Group, Inc. (NASDAQ:Z)’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. (NASDAQ:Z), down from 76 funds in the preceding quarter. ARK Investment Management held the biggest stake in Zillow Group, Inc. (NASDAQ:Z) 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. (NASDAQ:Z) 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.
