In this piece, we will take a look at Mario Gabelli’s views on Paramount and other stocks. If you want to skip our overview of Gabelli’s recent activity and hedge fund portfolio, you can skip to Mario Gabelli on Paramount and Other 5 Stocks.
In 1976, billionaire Mario Gabelli established Gabelli & Co. as an institutional brokerage house. Evolving over the years, the firm has transformed into one of the largest investment firms, now operating as GAMCO Investors. Insider Monkey’s research indicates that the firm’s latest investment portfolio is valued at $9.36 billion, solidifying its position as one of the world’s largest financial firms. Established nearly five decades ago in 1976, GAMCO achieved annual outperformance of the S&P 500 index by more than 2% in 1986. Notably, GAMCO also houses its asset management division known as GAMCO Asset Management, which holds significance in the firm’s history. Previously named Gabelli Asset Management Company, it underwent a name change to GAMCO in 2005 under the billionaire’s leadership.
Recognized as Morningstar’s Fund Manager of the Year in 1997 and The Institutional Investor’s Money Manager of the Year in 2010, Gabelli is among a group of investors who have embraced value investing principles established by Graham and Dodd while adding their unique approach to the strategy. In Gabelli’s case, this involves the perspective of approaching a public company as a potential acquirer. He believes that certain businesses may hold greater value in the private market than as publicly traded entities, making a valuation that appears fair in the markets particularly attractive from a buyer’s standpoint. As a result, his investment approach typically emphasizes cash flow over earnings.
A figure well-versed to us at Insider Monkey due to our extensive coverage of his investment strategies and stock preferences, Mario Gabelli recently came in the spotlight for his position on Paramount Global (NASDAQ:PARA). In early April, the company’s board elected to engage in exclusive merger talks with Skydance, led by CEO David Ellison, son of Oracle co-founder Larry Ellison, favoring the independent studio over Apollo Global Management’s $26 billion bid. As part of the proposed arrangement, Skydance, recognized for producing Paramount hits like “Top Gun: Maverick” would acquire Redstone’s stake in National Amusements, the privately held entity controlling nearly 80% of Paramount Global’s voting shares, for approximately $2 billion. Nonetheless, Gabelli voiced his preference for the company to adhere to its current turnaround strategy under Paramount Global (NASDAQ:PARA) president and CEO Bob Bakish. The prominent investor was outspoken in his criticism of the potential merger between Paramount and Skydance Media, advocating for Paramount to withdraw from deal negotiations entirely. Furthermore, in a separate interview, Gabelli, whose firm wields a substantial voting stake in Paramount Global (NASDAQ:PARA) via super voting shares and common stock, reiterated his opposition to a sale to Apollo Global Management as well.
However, reports suggest that Paramount Global (NASDAQ:PARA) may still be in negotiations with Skydance, albeit on a non-exclusive basis. Shareholders have grown wary of pursuing the Ellison path, fearing that a deal would disproportionately benefit Redstone to their detriment. To counter this, Skydance recently sweetened the deal by offering a $3 billion cash infusion, which would grant shareholders a larger stake than initially proposed. Meanwhile, the Sony/Apollo bid would result in the film studio becoming the controlling shareholder. Should this occur, industry observers predict that Paramount Global (NASDAQ:PARA) would likely operate as a label within the Sony Group Corporation (NYSE:SONY) framework. The Hollywood creative community is apprehensive about this prospect, as it would effectively strip Paramount Global (NASDAQ:PARA) of its autonomy and reduce the pool of studio buyers for filmmakers to pitch their projects to. This would continue a trend that began in 2019 when The Walt Disney Company (NYSE:DIS) acquired the entertainment assets of 21st Century Fox, reducing the number of autonomous studios to the current count of five.
In any case, Mario Gabelli continues to be a prominent figure on Wall Street, renowned for his impressive track record, and given his expertise and success, keeping an eye on his top stock selections is a prudent strategy. Considering these factors, following some of Gabelli’s favored stock picks, which include the likes of Deere & Company (NYSE:DE), Textron Inc. (NYSE:TXT), and United Rentals, Inc. (NYSE:URI), has the potential to yield significant profits for investors.
Mario Gabelli of GAMCO Investors
Our Methodology
In a recent interview with MarketWatch, Mario Gabelli shared some of his preferred stocks. We’ve examined these stocks and evaluated their one-year returns as of May 7 to assess Gabelli’s accuracy. The stocks have been ranked based on GAMCO’s stakes in terms of dollar value as of Q4 2023. Additionally, we’ve included hedge fund data to provide readers with additional context and insights into market sentiment towards these stocks. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
9. National Presto Industries, Inc. (NYSE:NPK)
Mario Gabelli’s Stake in Q4 2023: $2.15 million
One-Year Returns as of May 7: 22.46%
National Presto Industries, Inc. (NYSE:NPK) is a U.S.-based company headquartered in Eau Claire, Wisconsin, specializing in the sale of small electric home appliances. Its product range includes pressure cookers, heat-controlled skillets, air fryers, waffle makers, electric heaters, and pizza ovens. Gabelli mentioned that his interest in the company began when he used to analyze home appliances years ago. However, he became interested by its strong balance sheet and capable management. Additionally, National Presto Industries, Inc. (NYSE:NPK) consistently provides significant cash distributions to shareholders each year.
On February 20, National Presto Industries, Inc. (NYSE:NPK) released its quarterly earnings data, revealing earnings per share of $1.85 for the quarter. The conglomerate demonstrated a return on equity of 10.14% and a net margin of 10.14%. Moreover, it generated revenue of $98.42 million during the quarter.
In the fourth quarter of 2023, 8 out of the 933 hedge funds surveyed by Insider Monkey held a position in National Presto Industries, Inc. (NYSE:NPK). The largest investor in the company is Cliff Asness’ AQR Capital Management, which owns 61,228 shares valued at $4.91 million.
Similar to Deere & Company (NYSE:DE), Textron Inc. (NYSE:TXT), and United Rentals, Inc. (NYSE:URI), National Presto Industries, Inc. (NYSE:NPK) ranks as one of Mario Gabelli’s favored stocks.
8. United Rentals, Inc. (NYSE:URI)
Mario Gabelli’s Stake in Q4 2023: $16.13 million
One-Year Returns as of May 7: 97.8%
United Rentals, Inc. (NYSE:URI) operates as an industrial equipment rental company, offering a wide range of machinery including forklifts, cranes, tools, booms, and scissor lifts to clients primarily in the construction sector. The company has ambitious revenue targets, aiming to reach approximately $15 billion by 2024 and an even more substantial $20 billion by 2028.
As of the fourth quarter of 2023, Insider Monkey’s data shows that 48 hedge funds had stakes in United Rentals, Inc. (NYSE:URI), totaling $1.73 billion. The largest stakeholder among hedge funds was Ian Simm’s Impax Asset Management, holding a stake valued at $434.6 million in the company.
ClearBridge SMID Cap Growth Strategy stated the following regarding United Rentals, Inc. (NYSE:URI) in its fourth quarter 2023 investor letter:
“We exited our position in United Rentals, Inc. (NYSE:URI), in the industrials sector, an equipment rental company for general construction and industrial equipment. Despite being a long-term holding and having a history of strong stock price performance, we sold the stock because the company’s market capitalization exceeded a level that we judged appropriate for a SMID strategy.”
7. Strattec Security Corp. (NASDAQ:STRT)
Mario Gabelli’s Stake in Q4 2023: $18.57 million
One-Year Returns as of May 7: 15.37%
Strattec Security Corp. (NASDAQ:STRT) specializes in designing and manufacturing access control products for the automotive industry, ranging from mechanical and electronic locks to ignition lock housings and various power access systems. Its market reach extends globally, with operations spanning across North America, Europe, South America, and Asia, including aftermarket support. Additionally, Strattec Security Corp. (NASDAQ:STRT) serves the heavy truck and recreational vehicle markets and provides precision die castings.
Gabelli suggests that if Strattec Security Corp. (NASDAQ:STRT) can develop a website for selling their products online with a subscription-based model, it could significantly increase their valuation. He anticipates the company could generate earnings of $4 to $6 per share in their automobile division and despite expectations of prolonged high interest rates, remains optimistic about its performance in the next 12 to 18 months, particularly due to anticipated stability in car production.
In Q2 2024, the company experienced a rise in net sales, primarily attributed to pricing increases to major customers, resulting in a $8.0 million increase. However, this growth was partially offset by a $2.7 million decline in net sales, attributed to reduced sales to a major customer and the impact of the UAW strike on the U.S. auto industry. Despite these challenges, Strattec Security Corp. (NASDAQ:STRT) managed to significantly improve its gross margin, which increased from 6.5% to 11.4%.
Strattec Security Corp. (NASDAQ:STRT)’s largest investor was Mario Gabelli’s GAMCO Investors which owns 732,890 shares that are worth $18.57 million.
6. TEGNA Inc. (NYSE:TGNA)
Mario Gabelli’s Stake in Q4 2023: $31.47 million
One-Year Returns as of May 7: -9.29%
Tegna Inc. (NYSE:TGNA) is an American publicly traded company headquartered in Tysons Corner, Virginia, specializing in broadcast, digital media, and marketing services. Established on June 29, 2015, following the split of the Gannett Company into two publicly traded entities, Tegna owns and operates television stations, delivering news and informative content. Additionally, Tegna provides marketing solutions and services to individuals and businesses of all sizes.
According to Gabelli, investing in television advertising during presidential and political elections provides a substantial cash flow stream, which the company can use for stock buybacks. With efficient management practices in place, he believe there’s potential to realize a 50% return on investment within 12 months.
As of the end of last year’s December quarter, Insider Monkey’s tracking revealed that 25 out of the 933 hedge funds had invested in the company. Tegna Inc. (NYSE:TGNA)’s largest stakeholder among these investors is Cliff Asness’s AQR Capital Management, holding a stake valued at $67.8 million.
Tegna Inc. (NYSE:TGNA) joins the ranks of Deere & Company (NYSE:DE), Textron Inc. (NYSE:TXT), and United Rentals, Inc. (NYSE:URI) as a prominent stock in Gabelli’s portfolio.
Click to continue reading and see Mario Gabelli on Paramount and 5 Other Stocks.
Suggested articles:
- Jim Cramer Says “Hang On To Stocks” and Recommends 10 Stocks
- 11 Best Recession Dividend Stocks To Buy
- 10 Best May Dividend Stocks To Buy
Disclosure. None. Mario Gabelli on Paramount and Other Stocks is originally published on Insider Monkey.