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Mario Gabelli's Top 7 Buys of the 1st Quarter

- By James Li

Mario Gabelli (Trades, Portfolio), one of several speakers at the 2019 GuruFocus Value Conference, disclosed this week his top seven buys for the first quarter were Millicom International Cellular SA (TIGO), Fox Corp. (FOX)(FOXA), Spark Therapeutics Inc. (ONCE), Ellie Mae Inc. (ELLI), Synovus Financial Corp. (SNV), Gardner Denver Holdings Inc. (GDI) and Sirius XM Holdings Inc. (SIRI).


The GAMCO Investors Inc. (GBL) chairman and CEO graduated summa cum laude in 1965 from Fordham University's College of Business Administration and earned an MBA from Columbia University Graduate School of Business. Gabelli, who was Morningstar Inc.'s (MORN) "Portfolio Manager of the Year" in 1997, seeks undervalued companies that have a catalyst.

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As of quarter-end, Gabelli's $13.11 billion equity portfolio contains 825 stocks, of which 89 are new holdings. The top three sectors in terms of portfolio weight are industrials, consumer cyclical and financial services.

Millicom

Gabelli purchased 1,252,417 shares of Millicom, giving the position 0.58% equity portfolio weight. Shares averaged $62.72 during the quarter.

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The Luxembourg-based company provides fixed-line telephone, broadband and pay-TV services, primarily in Latin America and Africa. GuruFocus ranks Millicom's financial strength and profitability 4 out of 10 on several weak signs, which include an Altman Z-score that suggests possible financial distress, declining profit margins and revenue. Although Millicom's operating margin of 10.35% outperforms 51% of global competitors, the company's three-year revenue growth rate of 14.70% underperforms 90% of global telecom services companies.

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Fox

Gabelli disclosed holdings of 607,995 Class A shares and 1,168,521 Class C shares of Fox Corp., the standalone company formed through the pro rata distribution of Twenty-First Century Fox Corp.'s (TFCF)(TFCFA) shares in light of Fox's merger with The Walt Disney Co. (DIS). Class A shares averaged $38.89 during the quarter, while Class C shares averaged $38.11.

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GuruFocus ranks Fox's financial strength 8 out of 10 on several strong indicators, which include robust interest coverage of 38.46 and an Altman Z-score that suggests little or no financial distress.

Other gurus with holdings in Fox include Yacktman Asset Management (Trades, Portfolio) and the Yacktman Fund (Trades, Portfolio).

Spark Therapeutics

Gabelli purchased 259,331 shares of Spark Therapeutics, giving the position 0.23% equity portfolio weight. Shares averaged $72.19 during the quarter.

The Philadelphia-based biotechnology company develops products to aid patients suffering from debilitating diseases through gene therapy. GuruFocus ranks the company's financial strength 6 out of 10: Even though Spark Therapeutics has a weak Piotroski F-score of 3 and a Beneish M-score that suggests earnings manipulation, it has a solid Altman Z-score of 7.22 and a cash-debt ratio of 8.91.

Ellie Mae

Gabelli purchased 208,595 shares of Ellie Mae, giving the position 0.16% equity portfolio weight. Shares averaged $86.41 during the quarter.

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The Pleasanton, California-based company provides various solutions that allow banks, credit unions and mortgage lenders to originate and fund mortgages. GuruFocus ranks the company's financial strength 9 out of 10 on several positive signs, which include no long-term debt, a strong Altman Z-score of 20.37 and an equity-to-asset ratio that outperforms 92.77% of global competitors.

Synovus Financial

Gabelli purchased 336,782 shares of Synovus Financial, giving the position 0.09% equity portfolio weight. Shares averaged $36.65 during the quarter.

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The Columbus, Georgia-based bank provides commercial loans and real estate services primarily to small businesses in Georgia, Alabama, Florida, Tennessee and South Carolina. GuruFocus ranks the regional bank's financial strength 4 out of 10 on several moderately weak signs, which include a Beneish M-score of -2.25, slightly within the safe threshold of below -2.22, and an equity-to-asset ratio of 0.10, which underperforms 54.27% of global competitors.

Gardner Denver Holdings

Gabelli purchased 316,200 shares of Gardner Denver Holdings, giving the position 0.07% equity portfolio space. Shares averaged $25.07 during the quarter.

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The Milwaukee-based company provides mission-critical flow control and compression equipment and associated aftermarket parts, consumables and services. GuruFocus ranks the company's financial strength 5 out of 10: Although it has a solid Piotroski F-score of 6, Gardner Denver's debt-to-equity ratio of 0.94 underperforms 86.35% of global competitors.

Sirius XM Holdings

Gabelli purchased 1,525,336 shares of Sirius XM, giving the position 0.07% equity portfolio weight. Shares averaged $5.96 during the quarter.

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The New York-based company provides a subscription-based digital radio service originating from satellites that the company distributes through the sale and lease of new vehicles. GuruFocus ranks Sirius XM's profitability 9 out of 10 on several positive indicators, which include expanding profit margins, a strong Piotroski F-score of 7 and a three-year revenue growth rate that outperforms 83.85% of global competitors. Despite this, Sirius XM's financial strength ranks a modest 4 out of 10 on weak signs like a debt-to-Ebitda ratio close to Joel Tillinghast's warning level of 4, an Altman Z-score that suggests moderate financial distress and a Beneish M-score that suggests possible earnings manipulation.

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Berkshire Hathaway Inc. (BRK.A)(BRK.B) CEO Warren Buffett (Trades, Portfolio), who will host the conglomerate's 2019 shareholder meeting on Saturday, owns 137,915,729 shares of Sirius XM as of December 2018. Berkshire has not released its March quarter portfolio report as the deadline is 45 days after quarter-end.

Disclosure: No positions.

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This article first appeared on GuruFocus.