Mario Gabelli of GAMCO Investors identified some sectors which may offer opportunities for investors in a discussion on Fox Business Network. Speaking to Maria Bartiromo and company, Gabelli said that infrastructure, health and wellness, and real estate are the segments that investors should be looking at while picking the next investment opportunity.
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Mario Gabelli started GAMCO Investors in 1986. As of the end of June, the fund had an equity portfolio valued at about $18.46 billion. The whole GAMCO family of firms traces back its roots to 1977 and has more than $45 billion in assets under management. GAMCO spearheads the use of an investing approach it calls the Private Market Value with a Catalyst approach which uses fundamentals and treats companies as a potential acquirer would. In April, GAMCO announced plans to split into two separate publicly-traded firms with Gabelli retaining his post as chairman and chief executive officer of the asset management business.
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In the discussion on Fox Business Network, the first sector Gabelli said he sees opportunity for investors is in infrastructure. Joking that he sees how much infrastructure sucks whenever he drives, he said that problems in the current infrastructure of the country are easy to fix and will generate a lot of employment. He added that avionics, the application of electronic systems to planes and satellites, is one subset of the infrastructure sector that he is very much interested in. In terms of the more traditional infrastructure stocks, he agreed with the Fox hosts that Vulcan Materials Company (NYSE:VMC) may be a good pick. He also identified Astec Industries, Inc. (NASDAQ:ASTE) as a potential candidate for investment. He noted that once you look at the components of the narrowly-defined infrastructure components such as bridges, you see different companies such as makers of grates and other components.
Gabelli also said that biotechnology stocks are a bit of a challenge. He sees it as a subcomponent of health and wellness, a sector he says people can analyze by looking into what people will likely be eating in the future. He says that GAMCO likes yoghurt, and connects benefits which can be reaped from yoghurt stocks to General Mills, Inc. (NYSE:GIS) which makes cereals and of which GAMCO owned 2.56 million shares at the end of the second quarter.
In the healthcare sector, the billionaire investor said that opportunities can be seen in the diagnostics category. This is whether for companies doing DNA testing and for body parts treatments and makers for the aging population. In real estate, Gabelli said that there are opportunities, depending on the regions you look at and which subsectors of the real estate sector you look at. As an example, he said there is a bubble in Manhattan, where real estate prices are very high. He said that when you look at reports for the year, you see some builders having problems but also having backlog.
Gabelli then turned to non-third-party paid spending on companion pets. The money spent on cats and dogs in the U.S., of which he says there are 84 million and 77 million in the country, respectively, is very high and is expected to rise. Specifically, he said that generic drugs for pets may be one niche in the biotechnology subsector which may be worth looking at.
GAMCO Investor’s top three picks by the end of June were DIRECTV (NASDAQ:DTV), with 3.43 million shares worth about $318.55 million, Bank of New York Mellon Corp (NYSE:BK), with 6.68 million shares worth about $280.48 million, and Cablevision Systems Corporation (NYSE:CVC), with 11.48 million shares worth about $274.93 million.
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