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Mario Gabelli is Doubling Down on These 10 Stocks

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·10 min read
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  • GBL
  • FISV
  • GM
  • DELL
  • NVDA
  • GOOGL
  • O
  • MSFT

In this article, we discuss the 10 stocks that Mario Gabelli is doubling down on. If you want to skip our detailed analysis of these stocks, go directly to Mario Gabelli is Doubling Down on These 5 Stocks.

Mario Gabelli is among a handful of old school investors that still command great attention on Wall Street. His hedge fund, GAMCO Investors, had a portfolio value of $11.3 billion at the end of the third quarter of 2021 with the top ten holdings comprising just 15% of the portfolio, a rarity in the finance world with growth-heavy portfolios. Industrial and consumer goods, as well as finance and technology, comprise a major portion of the holdings. The billionaire has a personal net worth of around $2 billion.

Gabelli founded GAMCO Investors more than four decades ago. His long-term success at the market is down to an investing strategy that places great emphasis on valuations. In the 1980s, he made hundreds of millions at the market by betting big on the telecom and media sectors. His fund has since morphed into one of the most diverse on Wall Street. Between June and September, GAMCO Investors reduced holdings in 403 stocks, made new purchases in 57, sold out of 51, and made additional purchases in 232 stocks.

Some of the top stocks in the investment portfolio of GAMCO Investors at the end of September included Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), among others discussed in detail below.

Our Methodology

These were picked from the investment portfolio of GAMCO Investors at the end of the third quarter of 2021. The stocks in which the fund increased stake by 100% or more, compared to filings for the second quarter, were preferred.

The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.

Mario Gabelli is Doubling Down on These 10 Stocks
Mario Gabelli is Doubling Down on These 10 Stocks

Mario Gabelli of GAMCO Investors

Mario Gabelli is Doubling Down on These Stocks

10. Realty Income Corporation (NYSE:O)

Number of Hedge Fund Holders: 23

Percentage Increase in Stake During Q3: 673%

Realty Income Corporation (NYSE:O) is a real estate investment trust that focuses on long-term lease agreements with commercial clients. According to regulatory filings, GAMCO Investors owned 42,500 shares in the company at the end of September 2021 worth $2.7 million.

RBC Capital analyst Brad Heffern recently initiated coverage of Realty Income Corporation (NYSE:O) stock with an Outperform rating and a price target of $79, noting that there was improved confidence in the “high quality asset base” of the firm.

At the end of the second quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $221 million in Realty Income Corporation (NYSE:O), up from 18 in the previous quarter worth $183 million.

Just like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Realty Income Corporation (NYSE:O) is one of the stocks attracting the attention of hedge funds.

9. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 86

Percentage Increase in Stake During Q3: 641%

General Motors Company (NYSE:GM) is a Michigan-based automobile manufacturer. The company recently announced that it would be shifting focus to chip makers based in North America as it deals with a global semiconductor shortage that has hit the production of cars.

The hedge fund of billionaire Mario Gabelli owned over 437,680 shares of General Motors Company (NYSE:GM) at the end of the third quarter of 2021 worth more than $23 million, representing 0.2% of the total portfolio of the fund.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in General Motors Company (NYSE:GM) with 34 million shares worth more than $2 billion.

Junto Investments, in its Q4 2020 investor letter, mentioned General Motors Company (NYSE:GM). Here is what the fund has to say about General Motors Company in its letter:

“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”

8. Dell Technologies Inc. (NYSE:DELL)

Number of Hedge Fund Holders: 62

Percentage Increase in Stake During Q3: 468%

Dell Technologies Inc. (NYSE:DELL) makes and sells information technology solutions. GAMCO Investors owned 108,875 shares in the company at the end of September 2021 worth $11.3 million, representing 0.10% of the portfolio of the fund.

Citi analyst Jim Suva recently raised the price target on Dell Technologies Inc. (NYSE:DELL) stock to $70 from $65.76 and kept a Buy rating, highlighting that the shares had outperformed the market since late 2020.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Elliott Management is a leading shareholder in Dell Technologies Inc. (NYSE:DELL) with 24 million shares worth more than $2.5 billion.

Third Point Management, in its Q43 2021 investor letter, mentioned Dell Technologies Inc. (NYSE:DELL). Here is what the fund has to say in its letter:

“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”

7. Fiserv, Inc. (NASDAQ:FISV)

Number of Hedge Fund Holders: 72

Percentage Increase in Stake During Q3: 384%

Fiserv, Inc. (NASDAQ:FISV) provides payments and financial technology services. The company recently posted earnings for the third quarter, reporting earnings per share of $1.47, beating estimates by $0.02. The revenue over the period was $4 billion, up 9% year-on-year.

Latest securities filings reveal that GAMCO Investors owned 10,340 shares in Fiserv, Inc. (NASDAQ:FISV) at the end of the third quarter of 2021 worth $1.1 million.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Fiserv, Inc. (NASDAQ:FISV) with 12 million shares worth more than $1.2 billion.

In its Q1 2021 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ:FISV) was one of them. Here is what the fund said:

“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.

Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future.

In addition to Fiserv’s favorable business characteristics and competitive positioning, the management team, led by CEO Frank Bisignano, has a track record of successfully investing for growth, improving profitability, and intelligently allocating excess capital. We believe these value-creating activities will continue going forward.

Financial institutions are increasingly making investments to digitize…” [read entire letter here]

6. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 86

Percentage Increase in Stake During Q3: 301%

NVIDIA Corporation (NASDAQ:NVDA) is a visual computing firm. Regulatory filings show that GAMCO Investors owned 65,831 shares in the company at the end of the third quarter of 2021 worth over $13.5 million, representing 0.11% of the portfolio.

Raymond James analyst Chris Caso recently raised the price target on NVIDIA Corporation (NASDAQ:NVDA) stock to $365 from $225 and maintained a Strong Buy rating, noting that the level of growth that the firm had shown was an exception in the semiconductor space.

At the end of the second quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $9 billion in NVIDIA Corporation (NASDAQ:NVDA), up from 80 the preceding quarter worth $6 billion.

In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Fiserv, Inc. (NASDAQ:FISV) is one of the stocks that hedge funds are buying.

In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:

“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”

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Disclosure. None. Mario Gabelli is Doubling Down on These 10 Stocks is originally published on Insider Monkey.