Mario Gabelli is the founder, chairman, and CEO of Gabelli Asset Management Company Investors (GAMCO), a firm that manages over $30 billion in global investments. Gabelli is a proponent of the Graham-Dodd school of analysis and uses a bottom-up approach that examines the private market value of a firm. He targets undervalued companies that have a high probability of reaching their intrinsic value over time. He has also successfully made investments by identifying broad macro trends. His Asset Fund has earned a 10-year cumulative return of 87.5%, outperforming the S&P 500, which returned only 16.4% over the same stretch. According to his latest 13D filings, Gabelli reduced his position in SL Industries Inc. (SLI) by 7.01%.
Holding History
Gabelli timed his first purchase of SL Industries just as the stock price was nearing the end of its decline. He purchased 1.5 million shares at the average price of $7.63 in the fourth quarter of 2008. As prices bottomed out in the next quarter at an average of $5.07, Gabelli added another 33,000 shares. Gabelli would continue to add roughly 286,000 shares as prices recovered, and he had his peak holdings in the fourth quarter of 2009 when he held 1.8 million shares at an average price of $7.78. He then began selling his shares when prices crept back up. He sold 376,559 shares in the first quarter of 2010 for an average price of $8.04 and then 638,774 shares in the fourth quarter of 2010 for an average price of $15.9, earning a 108% return on his initial purchase.
In March and April, he nearly sold out his position, reducing his holdings to as few as 85,000 for an average price of $21.60, almost triple that of his original purchase. He then added 600,000 shares in late May for a price of $22.30. He most recently reduced his position by 7.01% in the company at an average price of $23.83, leaving him with 625,174 remaining shares.
SL Industries Inc. (SLI)
SL Industries designs, manufactures and markets power and data quality equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. The company is comprised of six business segments: Power Supplies, Power Conditioning and Distribution Units, Motion Control Systems, Electric Utility Equipment Protection Systems, Surge Suppressors and Other.
According to their latest quarterly statements, revenue for the quarter ended on March 31 was $52.59 million, an increase of 25% year-over-year and 3.7% quarter-over-quarter. Net income improved to $3.41 million, a tripling last year's net income and also improving on last quarter's $1.64 million loss. This increased earnings per share from $ -0.35 to $0.72, a large turn around. Free cash flow was a loss of $1.75 million, an improvement over last year's loss of $3.84 million. This was attributed to "increases in inventory and accounts receivable driven by higher sales and the timing of payments related to the 2010 bonuses and certain insurance premiums." However, annual free cash flow has been positive for the past decade and quarterly free cash flow has been positive for the three previous quarters. The company also plans to negotiate a new long-term debt agreement as the current agreement expires Oct. 1, 2011.
The stock is currently trading with a P/E ratio of 27.66 and a forward P/E ratio of 9.21. Its P/S ratio is .63, above its historical average, and quarterly sales per share have jumped upward the past two quarters to $11.12 per share now. Its P/B ratio is 2.15, also above its historical average, though book value per share has decreased recently to $10.76.
Recent Headlines
On 6/8/2011, TEAL Electronics, a subsidiary of SL Industries, introduced its newest product line, the TEALsolar Configurable Combiner Box for commercial and utility scale Solar Photovoltaic systems.
On 5/20/2011, MTE Corporation, a subsidiary of SL Industries, announced the release of the Matrix PureSine Active Harmonic Filter, a filtering solution for coordinated variable load power factor correction, phase imbalance and harmonic mitigation.
This is part of GuruFocus Real Time Picks report, which reports the stock trades of Gurus within the last few days. For more information, go to Real Time Picks.
Holding History
Gabelli timed his first purchase of SL Industries just as the stock price was nearing the end of its decline. He purchased 1.5 million shares at the average price of $7.63 in the fourth quarter of 2008. As prices bottomed out in the next quarter at an average of $5.07, Gabelli added another 33,000 shares. Gabelli would continue to add roughly 286,000 shares as prices recovered, and he had his peak holdings in the fourth quarter of 2009 when he held 1.8 million shares at an average price of $7.78. He then began selling his shares when prices crept back up. He sold 376,559 shares in the first quarter of 2010 for an average price of $8.04 and then 638,774 shares in the fourth quarter of 2010 for an average price of $15.9, earning a 108% return on his initial purchase.
In March and April, he nearly sold out his position, reducing his holdings to as few as 85,000 for an average price of $21.60, almost triple that of his original purchase. He then added 600,000 shares in late May for a price of $22.30. He most recently reduced his position by 7.01% in the company at an average price of $23.83, leaving him with 625,174 remaining shares.
SL Industries Inc. (SLI)
SL Industries designs, manufactures and markets power and data quality equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. The company is comprised of six business segments: Power Supplies, Power Conditioning and Distribution Units, Motion Control Systems, Electric Utility Equipment Protection Systems, Surge Suppressors and Other.
According to their latest quarterly statements, revenue for the quarter ended on March 31 was $52.59 million, an increase of 25% year-over-year and 3.7% quarter-over-quarter. Net income improved to $3.41 million, a tripling last year's net income and also improving on last quarter's $1.64 million loss. This increased earnings per share from $ -0.35 to $0.72, a large turn around. Free cash flow was a loss of $1.75 million, an improvement over last year's loss of $3.84 million. This was attributed to "increases in inventory and accounts receivable driven by higher sales and the timing of payments related to the 2010 bonuses and certain insurance premiums." However, annual free cash flow has been positive for the past decade and quarterly free cash flow has been positive for the three previous quarters. The company also plans to negotiate a new long-term debt agreement as the current agreement expires Oct. 1, 2011.
The stock is currently trading with a P/E ratio of 27.66 and a forward P/E ratio of 9.21. Its P/S ratio is .63, above its historical average, and quarterly sales per share have jumped upward the past two quarters to $11.12 per share now. Its P/B ratio is 2.15, also above its historical average, though book value per share has decreased recently to $10.76.
Recent Headlines
On 6/8/2011, TEAL Electronics, a subsidiary of SL Industries, introduced its newest product line, the TEALsolar Configurable Combiner Box for commercial and utility scale Solar Photovoltaic systems.
On 5/20/2011, MTE Corporation, a subsidiary of SL Industries, announced the release of the Matrix PureSine Active Harmonic Filter, a filtering solution for coordinated variable load power factor correction, phase imbalance and harmonic mitigation.
This is part of GuruFocus Real Time Picks report, which reports the stock trades of Gurus within the last few days. For more information, go to Real Time Picks.
