Billionaire Gabelli’s 10 Stock Picks with Huge Upside Potential
In this article, we will take a look at billionaire Gabelli’s 10 stock picks with huge upside potential. To skip our analysis of Gabelli's investment strategy and GAMCO Investor's previous performance, you can go directly to see the Billionaire Gabelli's 5 Stock Picks with Huge Upside Potential.
Mario Joseph Gabelli is a renowned investor, Founder, Chairman and Chief Executive Officer of GAMCO Investors, Inc. Prior to forming the firm in 1977, Mario Gabelli graduated summa cum laude from Fordham University's College of Business Administration in 1965 and later earned an M.B.A. from Columbia University Graduate School of Business in 1967. His knack for picking winning stocks became well-known during the 1980s, especially when he made profitable investments in the media and telecom industries. His real-time net worth is estimated at $1.6 billion, as of November 30.
GAMCO Investors, Inc. is a well-known investment advisor currently providing advisory services to 24 open-end funds, 14 closed-end funds, 5 actively managed semi-transparent ETFs, 1 SICAV, and nearly 1,400 institutional and private wealth management investors principally in the United States. The total assets under management of the firm amounted to $29.2 billion as of September 30, 2023. The total assets under management included $24.9 billion in equity AUM. The biggest portion of the AUM, at $18.1 billion, more than 62% of total AUM, was flagged for value style investments.
GAMCO Investors provides a broad range of investment solutions to its clients. Its strategies include Value and Growth Equity, socially responsible investing, convertibles, sector focused such as Gold and Utilities, merger arbitrage, and treasury money market investment. The firm launched its flagship All Cap Value strategy, Gabelli Value in 1977 and entered the mutual funds business in 1986. One of Gabelli's oldest and most successful strategies, the Gabelli Asset Management Value, has been delivering exceptional performance since its inception in 1977, with an average annual return of 14.1%. This outperforms the average annual return of about 11.5% for the S&P 500 index over the same period.
Gabelli is famous for investing in undervalued companies. In an interview published by Columbia Business School in July, Gabelli said the following about his investment philosophy:
“In the mid ’70s, I started a firm, but nobody wanted to own stocks. Businessweek even had a headline, “The Death of Equities.” I had to figure out a way to convince individuals to invest. So I asked, if I found a company that was publicly traded, what would it be worth if somebody could buy the entire company? And I think in terms of private companies, so what is the private market value (PMV)?
And then, because my clients’ time horizon was two or three years — not two or three hours — I looked for what’s called a catalyst. Catalysts can take many forms, like a new product introduction, an industry consolidation, or a sale or spin-off — something that might cause a previously undervalued company to reach its intrinsic value. I trademarked the concept of “private market value with a catalyst,” and that's my fingerprint on value investing.”
Methodology
To find billionaire Gabelli’s 10 stock picks with huge upside potential we first identified the top 50 holdings of GAMCO Investors' 13F portfolio, as of Q3 2023. We ranked these stocks based on the upside potential with reference to the average analyst price targets for these stocks as per their respective share prices as of November 28. The stocks on this list are the top 10 stocks ranked based on their upside potential.
10. Dril-Quip, Inc. (NYSE:DRQ)
GAMCO Investors' Stake Value: $55,549,634
Upside Potential as of November 28: 33.16%
Houston, Texas-based Dril-Quip, Inc. (NYSE:DRQ) manufactures offshore drilling and production equipment, which is well-suited for use in deepwater, harsh environments and severe service applications.
On October 26, Dril-Quip, Inc. (NYSE:DRQ) reported the financial results for Q3 2023. Its revenue increased by 33% y-o-y to $117 million while it recorded a net loss of $7 million, compared to a net income of $13 million. Its normalized EPS of -$0.15 missed consensus estimates by $0.28.
During the third quarter, Dril-Quip, Inc. (NYSE:DRQ) closed the acquisition of Great North Wellhead and its subsidiaries for $80 million in an all-cash transaction. The target company is a leading provider of mission-critical wellhead products and well-completion solutions. The company was also awarded a wellhead tender with Petrobras supporting their pre-salt well development project worth up to $28 million.
As of Q3 2023, Dril-Quip, Inc. (NYSE:DRQ) shares were owned by 13 hedge funds with the total value of shares held by them valued at $96 million. Mario Gabelli’s GAMCO Investors was its largest hedge fund shareholder with ownership of 2.0 million shares valued at $55.5 million.
9. Herc Holdings Inc. (NYSE:HRI)
GAMCO Investors' Stake Value: $196,873,770
Upside Potential as of November 28: 36.16%
Bonita Springs, Florida-based Herc Holdings Inc. (NYSE:HRI), is a leading equipment rental supplier with approximately 382 locations in North America. It offers a broad portfolio of equipment for rent including aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting.
On October 23, Herc Holdings Inc. (NYSE:HRI) released its financial results for Q3 2023 with nearly 20% year-over-year increases across revenue and net income figures. It generated a revenue of $908 million and a net income of $113 million which translated into an EPS of $3.98, slightly below the consensus.
Herc Holdings Inc. (NYSE:HRI) initiated quarterly dividends in Q4 2021 and has increased its dividend payout on annual basis in both years. In February, the Board of Directors of the company raised the dividend amount by 10% to $0.6325 per share which represents a dividend yield of 1.98%.
As of Q3 2023, Herc Holdings Inc. (NYSE:HRI) shares worth $578 million were owned by 28 prominent hedge funds tracked by Insider Monkey. Gabelli’s GAMCO Investors was the largest hedge fund shareholder of the company with ownership of nearly 1.7 million shares valued at $197 million. The stock accounted for 2.28% of the total portfolio value for the hedge fund, the highest among its holdings.
8. Rush Enterprises, Inc. (NASDAQ:RUSHA)
GAMCO Investors' Stake Value: $51,142,600
Upside Potential as of November 28: 37.87%
Based in San Antonio, Texas, Rush Enterprises, Inc. (NASDAQ:RUSHA) is a leading commercial vehicles retailer with more than 150 locations in 23 states and Ontario, Canada, including 125 franchised dealership locations. Its offerings include sales of new and used vehicles to aftermarket parts, service and body shop operations plus financing, insurance, leasing and rental.
Rush Enterprises, Inc. (NASDAQ:RUSHA) posted a strong financial performance in Q3 2023. Its gross revenues increased by 6% y-o-y to $2.0 billion while it generated a net income of $80 million or $0.96 per share. The Board of Directors of the company also declared a cash dividend of $0.17 per share.
As of September 30, GAMCO Investors held nearly 1.1 million shares of Rush Enterprises, Inc. (NASDAQ:RUSHA), worth $51 million. The company represented 0.59% of the firm’s 13F portfolio.
7. Atlanta Braves Holdings, Inc. (NASDAQ:BATRK)
GAMCO Investors' Stake Value: $51,263,082
Upside Potential as of November 28: 38.06%
Atlanta Braves Holdings, Inc. (NASDAQ:BATRK), through its wholly owned subsidiary, is the owner and operator of the Atlanta Braves Major League Baseball Club and the mixed-use real estate development, The Battery Atlanta, and is the operator of the Atlanta Braves Major League Baseball Club’s stadium, Truist Park.
On July 18, Atlanta Braves Holdings, Inc. (NASDAQ:BATRK) completed its split-off from Liberty Media Corporation (NASDAQ:LXSMA). Following that, the company became an independent entity and its shares started trading on the NASDAQ.
As of Q3 2023, Atlanta Braves Holdings, Inc. (NASDAQ:BATRK) shares were held by 37 hedge funds with the total shares held by them valued at $457 million. The stock was a new addition to GAMCO Investors’ 13F portfolio during the quarter and accounted for 0.59% of portfolio value with 1.4 million shares worth $51.3 million held by the firm.
6. Astec Industries, Inc. (NASDAQ:ASTE)
GAMCO Investors' Stake Value: $49,197,067
Upside Potential as of November 28: 39.39%
Chattanooga, Tennessee-based Astec Industries, Inc. (NASDAQ:ASTE) is a leading global manufacturer of specialized equipment for asphalt road building, aggregate processing, and concrete production.
On November 1, Astec Industries, Inc. (NASDAQ:ASTE) released its quarterly results for Q3 2023. Its total revenues decreased by 4% y-o-y to $303 million, while it posted a net of $6.6 million. It reported a normalized EPS of -$0.01 for the quarter, which missed the consensus estimates by $0.63.
As of Q3 2023, 13 hedge funds out of the 910 hedge funds tracked by Insider Monkey were bullish on Astec Industries, Inc. (NASDAQ:ASTE) and held its shares valued at $61 million. GAMCO Investors held the highest number of shares among hedge funds with ownership of 1.04 million shares, valued at $49.2 million.
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Disclosure: None. Billionaire Gabelli's 10 Stock Picks with Huge Upside Potential is originally published on Insider Monkey.
