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10 Favorite Stocks of Mario Gabelli

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·11 min read
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In this article, we discuss 10 favorite stocks of Mario Gabelli. If you want to see the five largest holdings in the billionaire’s portfolio, click 5 Favorite Stocks of Mario Gabelli.

Mario Gabelli is a billionaire Italian-American investor and hedge fund manager who founded GAMCO Investors, a New York-based investment advisor and brokerage firm, in 1976. Mario Gabelli is one of the most successful Wall Street financiers, who manages an $11.6 billion 13F portfolio for his clients as of the fourth quarter of 2021.

Gabelli graduated from Fordham University's College of Business Administration in 1965. He went on to get an MBA from Columbia University Graduate School of Business, and honorary doctorates from Fordham University and Roger Williams University. He currently serves as the chief executive officer and chairman of GAMCO Investors.

GAMCO Invests is a value-oriented hedge fund that follows an active investment approach. The fund seeks out large-cap companies with strong long-term growth prospects, with valuations that are relatively attractive as compared to their earning potential. ESG approach is also a longstanding strategy adopted by GAMCO, and the hedge fund is focused on sustainability as a long-term theme, with governance being a top priority.

Mario Gabelli is keen on the materials, information technology, healthcare, finance, consumer discretionary, consumer staples, and communications sectors. Some of the most notable stocks in the fourth quarter portfolio of GAMCO Investors include The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG).

10 Favorite Stocks of Mario Gabelli
10 Favorite Stocks of Mario Gabelli

Mario Gabelli of GAMCO Investors

Our Methodology

We used the Q4 2021 portfolio of Mario Gabelli’s GAMCO Investors to enlist the hedge fund’s top 10 stock picks.

Favorite Stocks of Mario Gabelli

10. The Bank of New York Mellon Corporation (NYSE:BK)

GAMCO Investors’ Stake Value: $124,526,000

Percentage of GAMCO Investors’ 13F Portfolio: 1.06%

Number of Hedge Fund Holders: 49

The Bank of New York Mellon Corporation (NYSE:BK) is a leading American corporate investment bank that specializes in global wealth management, financial analysis, and private equity. Mario Gabelli’s GAMCO Investors trimmed its stake in The Bank of New York Mellon Corporation (NYSE:BK) during Q4 2021 by 7%, holding 2.14 million shares worth $124.5 million.

On April 18, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.34 per share, in line with previous. The dividend is payable on May 11, to shareholders of record on April 28. The stock delivers a dividend yield of 3.14% as of April 26.

The Bank of New York Mellon Corporation (NYSE:BK) posted its Q1 2022 earnings on April 18, announcing an EPS of $0.94, above consensus by $0.08. The $3.93 billion revenue fell short of analysts’ estimates by $12.30 million. The exit from Russia hurt the Q1 results, but a rising rates environment is expected to help the upcoming quarters.

JPMorgan analyst Vivek Juneja on April 27 downgraded The Bank of New York Mellon Corporation (NYSE:BK) to Neutral from Overweight, slashing the price target to $51.50 from $59. The analyst also removed the stock from the firm's Analyst Focus List, stating that the company’s asset sensitivity to higher interest rates will likely be partially offset by the restructuring of its securities portfolio and shrinkage of deposits due to pressure on capital.

According to Insider Monkey’s Q4 data, 49 hedge funds were bullish on The Bank of New York Mellon Corporation (NYSE:BK), with combined stakes exceeding $5 billion, compared to 46 funds in the prior quarter, holding stakes in the company worth $4.65 billion. Warren Buffett’s Berkshire Hathaway is the biggest position holder in The Bank of New York Mellon Corporation (NYSE:BK), with 72.3 million shares valued at $4.20 billion.

In addition to The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG), The Bank of New York Mellon Corporation (NYSE:BK) is a notable stock from Mario Gabelli’s Q4 portfolio.

Here is what Ariel Investments has to say about The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter:

“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.

This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”

9. Watts Water Technologies, Inc. (NYSE:WTS)

GAMCO Investors’ Stake Value: $126,940,000

Percentage of GAMCO Investors’ 13F Portfolio: 1.08%

Number of Hedge Fund Holders: 23

Watts Water Technologies, Inc. (NYSE:WTS) is a Massachusetts-based company that designs and sells systems that manage the flow of fluids and energy in buildings. The company caters to the commercial and residential markets in the Americas, Europe, the Asia-Pacific, the Middle East, and Africa.

Securities filings for Q4 2021 reveal that Mario Gabelli’s fund owns 653,757 shares of Watts Water Technologies, Inc. (NYSE:WTS), worth approximately 127 million, representing 1.08% of the total 13F portfolio. The hedge fund slashed its stake in Watts Water Technologies, Inc. (NYSE:WTS) by 10% in the fourth quarter of 2021.

On April 18, Stifel analyst Nathan Jones lowered the firm's price target on Watts Water Technologies, Inc. (NYSE:WTS) to $148 from $159 and kept a Hold rating on the shares. At a high level, the analyst forecasts Q1 2022 to look "a lot like" Q4 2021, with guidance for Q2 also looking similar.

Among the hedge funds tracked by Insider Monkey, 23 funds were long Watts Water Technologies, Inc. (NYSE:WTS) at the end of December 2021, compared to 16 funds in the preceding quarter. The total stakes held in Q4 2021 roughly amounted to $542 million. Ian Simm’s Impax Asset Management is the leading shareholder of the company, with 1.84 million shares worth $356.76 million.

8. Textron Inc. (NYSE:TXT)

GAMCO Investors’ Stake Value: $148,655,000

Percentage of GAMCO Investors’ 13F Portfolio: 1.27%

Number of Hedge Fund Holders: 35

Textron Inc. (NYSE:TXT) was founded in 1923 and is headquartered in Providence, Rhode Island, operating in the aircraft, defense, industrial, and finance sectors. Mario Gabelli’s GAMCO Investors held 1.92 million Textron Inc. (NYSE:TXT) shares in Q4 2021, worth $148.65 million, representing 1.27% of the total 13F holdings.

On March 7, Jefferies analyst Sheila Kahyaoglu noted that Textron Inc. (NYSE:TXT)’s Aviation backlog is supported by new entrants and model upgrades. Given some Aviation tailwinds and a potential FLRAA win for a $80 billion program likely to be awarded in June/July "on its doorstep", Textron Inc. (NYSE:TXT)’s present levels "could prove compelling" since shares are trading at a 27% discount to peers, compared to the stock's historical discount of approximately 20%. The analyst maintained a Buy recommendation and a $90 price target on Textron Inc. (NYSE:TXT) shares.

According to Insider Monkey’s fourth quarter database, 35 hedge funds reported owning stakes in Textron Inc. (NYSE:TXT), worth $1.09 billion, compared to 31 funds in the prior quarter, holding stakes in the company valued at $1.13 billion. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest shareholder of Textron Inc. (NYSE:TXT), with 4.3 million shares worth $339.1 million.

7. American Express Company (NYSE:AXP)

GAMCO Investors’ Stake Value: $148,663,000

Percentage of GAMCO Investors’ 13F Portfolio: 1.27%

Number of Hedge Fund Holders: 64

American Express Company (NYSE:AXP) is a New York-based multinational corporation that offers finance products and solutions, such as charge cards, credit cards, traveler's cheques, and corporate banking. The company also offers insurance services. Mario Gabelli’s GAMCO Investors owns 908,697 shares of American Express Company (NYSE:AXP) as of Q4 2021, worth $148.6 million, representing 1.27% of the total portfolio.

American Express Company (NYSE:AXP) reported on April 22 its Q1 results, posting earnings per share of $2.73, beating market estimates by $0.26. Revenue for the period grew almost 29.5% year-over-year to $11.74 billion, outperforming Street forecasts by $76 million.

On March 10, American Express Company (NYSE:AXP) declared a $0.52 per share quarterly dividend, a 20.9% increase from its prior dividend of $0.43. The dividend is payable on May 10, to shareholders of record on April 8.

Citi analyst Arren Cyganovich raised the price target on American Express Company (NYSE:AXP) to $190 from $187 and maintained a Neutral rating on the shares on April 26. According to the analyst, American Express Company (NYSE:AXP) reported strong results but the outperformance relative to estimates was primarily due to lower provision and tax rate.

Ken Fisher’s Fisher Asset Management is one of the leading shareholders of American Express Company (NYSE:AXP), with 15.74 million shares worth $2.5 billion. Overall, 64 hedge funds were bullish on the stock at the end of December 2021.

Here is what ClearBridge Investments has to say about American Express Company (NYSE:AXP) in its Q2 2021 investor letter:

“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”

6. Crane Co. (NYSE:CR)

GAMCO Investors’ Stake Value: $150,516,000

Percentage of GAMCO Investors’ 13F Portfolio: 1.28%

Number of Hedge Fund Holders: 25

Crane Co. (NYSE:CR) is based in Stamford, Connecticut, operating as a manufacturer of engineered industrial products in the United States, Canada, the United Kingdom, Continental Europe, and international markets. The company specializes in aerospace and electronics, engineered materials, payment and merchandising technologies, fluid handling, and sensing and control systems.

Securities filings for the fourth quarter of 2021 disclosed that Mario Gabelli held about 1.5 million shares of Crane Co. (NYSE:CR), worth $150.5 million, accounting for 1.28% of the total 13F securities.

Crane Co. (NYSE:CR) declared on April 25 a $0.47 per share quarterly dividend, in line with previous. The dividend is distributable on June 8, for shareholders of record on May 31. The company announced its Q1 2022 financial results on April 25, reporting earnings per share of $1.81, beating consensus estimates by $0.13. The $801.10 million revenue also outperformed market forecasts by $338,940.

On April 18, Stifel analyst Nathan Jones reiterated a Buy rating on Crane Co. (NYSE:CR) but lowered the firm's price target on the stock to $134 from $137 as part of his earnings preview note for his diversified industrials coverage.

According to Insider Monkey’s Q4 data, 25 hedge funds were bullish on Crane Co. (NYSE:CR), with collective stakes worth $310.6 million, compared to 20 funds in the earlier quarter, holding stakes in the company valued at $286.2 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a significant shareholder of Crane Co. (NYSE:CR), with a position worth about $51 million.

Elite investors are pouring into Crane Co. (NYSE:CR), just like The Walt Disney Company (NYSE:DIS), Wells Fargo & Company (NYSE:WFC), and Alphabet Inc. (NASDAQ:GOOG).

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Disclosure: None. 10 Favorite Stocks of Mario Gabelli is originally published on Insider Monkey.