Since 1977 when Gabelli founded his firm GAMCO Investors he stayed true to the principles of value investing. He used a solid base created by Warren Buffett and Ben Graham and added some of his elements to the mix. This approach proved to be delivering solid results since his company is still one of the most successful in the field. Mario Gabelli’s portfolio holdings are currently worth $9.32 and are diversified amongst different sectors.
Gabelli’s portfolio is divided between 802 holdings, which means that there are no specifically big players to look for. The largest holdings include Herc Holdings Inc, Crane Co, Modine Manufacturing, and Mueller Industries Inc. The top ten holdings take only 18.8% of the entire portfolio.
Gabelli recently exited Circor International (NYSE:CIR), and Liberty Global Class A and Class C stocks (NASDAQ:LBTYK) holdings. A new addition includes Bluegreen Vacations Holding Corporation (NYSE:BVH). For more relevant information about Mario Gabelli’s portfolio and investment strategy, stay with us.
Key Holdings
- Herc Holdings Inc (NYSE:HRI) with 2.9% of the portfolio
When we look at the trading history of HRI stocks, Gabelli made some perfectly timed sales. He began trading their stocks in 2016. He constantly has the same approach – buys massive stakes when the stock price is down, and sells when the price reaches the top value. Most of the stocks from his current stake of 1.61 million are bought at prices between $34 and $37. He has been slowly selling them at prices between $110 and $200. He invested in this holding a total of $58.8 million, and it has brought a gain of 361%.
- Crane Co (NYSE:CR) with 2.3% of the portfolio
Gabelli just loves to have an ample stake in Crane because it has brought him so much good over the decades. He started trading their stocks in 2001 and immediately went big and bought almost 5 million stocks. The stock price fluctuated in the last five years, but Gabelli managed to stay on top, and always sold at the right moments. He currently owns 1.75 million stocks, after a massive buy of 1 million stocks in 2023. He invested in the company $55 million, while his current stake is valued at $217 million generating a gain of 290%.
- Modine Manufacturing Co (NYSE:MOD) with 2.1% of the portfolio
Modine Manufacturing is another over a quarter century old investment that just like the holdings already mentioned brought massive gains. That shows some of Gabelli’s character, that once he finds a company that brings results, he sticks with it. He now owns 2.22 million shares, and since mid-2022 he has been selling small chunks of this holding. He invested $29.8 million in it, while it is valued at $198 million with a gain of 564%.
- Mueller Industries Inc (NYSE:MLI) with 2.1% of the portfolio
This long-term investment wasn’t profitable like once mentioned before, but a gain of 249% over two decades is impressive. Most of his current stake is bought at discount prices between $13 and $15 while he is slowly selling them in the last two years at prices above $30 making significant gains. Gabelli invested $55.7 million into this holding and it is now valued at $194 million.
- GATX Corporation (NYSE:GATX) with 2.0% of the portfolio
Like with most of Gabelli’s bigger holdings, he has been selling small portions of stocks in the last couple of years. The last time he bought a bigger share stake was in 2010 when he paid $32 per share. From 2016 the price steadily rose from $60 to the current $130. He netted a gain of 281% and the value of this holding is at $188 million.
- Sony Group Corp (NYSE:SONY) with 1.7% of the portfolio
All holdings that we discussed with Gabelli have been trading for at least two decades, and Sony is not an exception. The last time Gabelli invested a larger sum into Sony was almost ten years ago when their stocks were at just $16. In the last three years, while Gabelli has been selling his stake in the company, the stock price didn’t go below $60. The value of this holding is currently at $154 million.
- Textron Inc (NYSE:TXT) with 1.6% of the portfolio
Gabelli’s current Textron holding has 1.62 million stocks that are valued at $146 million. From 2004 Gabelli invested $34.8 million, netting a gain of 321%. In the past three and a half years he has been slowly trimming this holding with massive value gain.
Sector Allocations
Mario Gabelli’s investments are diversified amongst numerous sectors. The bulk of his investments are in the companies from the Industries sector, but there are solid investments all over the industry spectrum.
- Industrials with 33.6% of the portfolio valued at $3.13 billion
- Consumer Discretionary with 12.9% of the portfolio valued at $1.20 billion
- Finance with 11.4% of the portfolio valued at $1.07 billion
- Technology with 7.8% of the portfolio valued at $727 million
- Consumer Staples with 6.9% of the portfolio valued at $640 million
- Telecommunications with 5.4% of the portfolio valued at $504 million
- Real Estate with 5.1% of the portfolio valued at $474 million
- Utilities with 4.8% of the portfolio valued at $449 million
- Healthcare with 3.5% of the portfolio valued at $321 million
- Materials with 3.0% of the portfolio valued at $278 million
- Energy with 2.3% of the portfolio valued at $219 million
- Companies with characteristics suitable to the “Other” bracket with 3.4% of the portfolio valued at 314 million.
Mario Gabelli Investment Strategies and Philosophy
When Gabelli started his investment career the biggest players were Buffett and Graham. He found their approach by betting on the undervalued companies, something he can relate to.
But, in addition to Buffett and Graham’s approach, he added something unique, a so-called catalyst. A catalyst represents a specific event or factor that can help in unlocking the full potential of the company.
The first step in his investment approach is identifying undervalued companies. He is encouraged to invest in businesses trading below their intrinsic value. To properly identify these companies, he invests a lot of time and manpower in fundamental bottom-up research.
To understand the state of the company he is gathering all available and relevant data about it. Those include going through financial statements, like balance sheets, income statements, and cash flows. These can paint a solid picture of the overall financial condition of the company.
The next step is to analyze the industry and its trends. With the available data, Gabelli aims to predict the future movements in the target industry. To be able to do that, he is also analyzing major competitors, and whether there are chances for the target company to create a competitive edge.
Another crucial element for the puzzle that makes a good company to invest in is the management. Gabelli checks all the top executives, their track record, and what is their approach to business. Knowing how to use the revenue and invest the available capital is essential for the development of business.
With these data gathered and analyzed Gabelly can safely predict possible future scenarios for the company, and is capable of generating positive returns in the long run.
The final impact factor of his strategy is to identify a potential factor or action that can push the company upwards. That can be a change in the top management, a merger, acquisition, or even selling a part of the company. Gabelli named his approach Private Market Value with a Catalyst.
Although Gabelli does not favor any specific industry sector, he became famous by investing in the telecommunication and media sectors.
Take A Look At Billionaire Mario Gabelli Talks Picking Winning Stocks, and How He Became a Wall Street Legend:
Mario Gabelli Performance Analysis
Historical Trends
When analyzing historical trends we will take into account available data going back to 1988. A 35-year cumulative gain between 1988 and 2022 is 3641.25% when compared to the S&P 500 1437% gain in the same period. When we break these data to get to annualized returns we get a 10.90% gain of the fund, while the index generated 8.12% annual returns.
As time went by, the fund’s performance went down. We can see this when we analyze the data in the last 15 years (2008 to 2022). In that period the fund generated a cumulated gain of 172.82% while the index came close to 161.96. When looking at yearly gains it translates into 6.92% to 6.63% in favor of the fund.
In the period between 2013 and 2022 the fund underperformed, and finally got beaten by the index. In that time frame the fund generated cumulative gains of 134.12% or 8.88% per year. In that period the S&P 500 cumulative gains went to 169.21% or 10.41% per year.
Notable Failure
Mario Gabelli was just one of the big player investors who got burned by Valeant Pharmaceuticals. They were accused of accounting malpractices, and once that information came to light, their stock price plunged.
Another example is the investment in Fairchild Publications in 1990. Gabelli saw the company as an undervalued asset that had strong connections in the industry and a solid customer base. But, the industry landscape quickly started to change, and the firm couldn’t keep up with the pace. Gabelli did get some returns, but not as he predicted he would.
Notable Success
The first and biggest success of Mario Gabelli’s career is founding and running a hedge fund for almost half a century. That is a rare feat, and there are not a lot of investors with such a long career.
Besides the longevity and perseverance in the work, there is obvious success. Between 1977 and 2013 his fund was constantly outperforming the index. Recent years yielded mixed results, but most of them are above the performance of the majority of hedge funds.
He became famous for his investments in telecommunication and media companies during the 80s. Some of his best picks were the CBS Corporation.
Other personal accolades include the Morningstar award for the best hedge fund manager in 1997. Also, Morningstar awarded him in 2010 with the Best Institutional Investor Money Manager award. As a special commendation also comes the inclusion in Barron’s All-Star team of the century.
Outlook and Future Prospects
Discussing the outlook and prospects of GAMCO Investors is a tough topic, mostly due to Mario Gabelli’s age. He is currently 81 years old, and there is no concrete information about his successor. He is still agile, and his investment approach is still delivering solid results, but in the last 10 years, his fund did underperform the S&P 500 index.
On the plus side, he has a solid track record, and in the last two years, his fund’s performance improved. The only glaring issue is his age, and we still have to wait and see his plans.
FAQs
Is Gabelli Equity Trust a Good Investment?
Like any other investment, it has some good but also bad sides.
The good side is that you are investing with Mario Gabelli, a manager with half a century of experience. He and his team have a proven track record of good performance. Other benefits include a high benefit yield of 10% which is higher than an average yield of a S&P 500 index.
Gabelli’s investment strategy is characterized by low volatility, and chances of high growth potential. His focus on undervalued companies can yield massive gains in case of a good bet, while in case of losses, those are lower due to the margin of safety.
While Mario Gabelli’s leadership is seen as a benefit, reliance on his experience can also be a risk and a limiting factor. Another major issue is that part of the mentioned high yield can come from the trust’s net assets. This in reality means that its yield is not all on the company and its profits. When you factor this in it can lead to lower investment return in the long term.
Another issue is that the Gabelli Equity Trust is a closed-end, non-diversified trust. They invest in a finite number of companies which can increase the investment risk. If you are worried about market risk, maybe a better option is to invest in a broader market index fund.
How Much Is Mario Gabelli Worth?
Mario Gabelli’s net worth is estimated at $1.9 billion. It includes his luxury home in Greenwich, Connecticut, and his collection of art and luxury cars.
What Is the Symbol for The Gabelli Capital Asset Fund?
The symbol for the Gabelli Capital Asset fund is (MUTF:GABAX). Gabelli’s other Equity trust fund symbol is (NYSE:GAB).
Final Thoughts
Mario Gabelli and his innovative approach to value investing have been a hot topic in the investment world for decades. Long excellent track record, solid performance, and overall influence place him in the value investing hall of fame.
His current performance is not on the level of the previous decades, but that can also be attributed to high volatility periods that caused massive problems for most of the hedge funds. His current biggest holdings are generating good results, and after a solid trim of his portfolio in the Q3 and Q4 of 2023, we still have to wait out and see his plans for the future.
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