Mario Gabelli (Trades, Portfolio), founder, chairman and CEO of GAMCO Investors, gained 58 new holdings in the final quarter of 2016. His top three new holdings are Brocade Communications Systems Inc. (BRCD, Financial), Endurance Specialty Holdings Ltd. (ENH, Financial) and Liberty Expedia Holdings Inc. (LEXEA, Financial).
Gabelli founded his firm in 1976 in Rye, New York. With a 15-member investment team and over 40 analysts, the firm utilizes fundamental, bottom-up research and a consistent investment process to generate superior risk-adjusted returns. As of Sept. 30, 2016, the firm had $39.9 billion in assets under management.
The guru investor purchased 778,896 shares of Brocade Communications for an average price of $11.25 per share, giving it 0.06% portfolio space.
Brocade Communications supplies networking hardware, software and services to businesses and organizations. It has a market cap of $5.01 billion; its shares were trading around $12.33 on Monday with a price-earnings (P/E) ratio of 23.7, a forward P/E ratio of 12.8, a P/B ratio of 1.9 and a P/S ratio of 2.2.
In late January, Brocade shareholders approved the company’s buyout of Broadcom Ltd. (AVGO, Financial) for $5.9 million. The deal is expected to close in October.
The Peter Lynch chart shows the stock is trading above its fair value.
GuruFocus ranked Brocade’s financial strength 6 of 10 and its profitability and growth 7 of 10. The trailing 12-month dividend yield is 1.7%, and the forward dividend yield is 1.8%. Over the past three years, the company has grown its EPS by 4.3% per year.
Jim Simons (Trades, Portfolio) is the largest shareholder among the gurus with 1.8% of outstanding shares. This represents 0.12% of his total assets managed. In total, eight gurus hold the stock.
Gabelli bought 86,300 shares of Endurance Specialty Holdings for an average price of $91.65 per share. The trade impacted the portfolio by 0.05%.
Endurance is a holding company that underwrites specialty insurance. The Bermuda-based company has a market cap of $6.3 billion; its shares were trading around $92.74 on Monday with a P/E ratio of 15.5, a P/B ratio of 1.3 and a P/S ratio of 2.34.
In October 2016, Endurance Specialty entered into an acquisition agreement with Sompo Holdings Inc. (TSE:8630, Financial). Sompo will buy 100% of Endurance’s outstanding ordinary shares for $93 per share in cash. The deal is expected to close this month.
The Peter Lynch chart below shows the stock is trading about even with its fair value.
GuruFocus ranked Endurance’s financial strength 6 of 10 and its profitability and growth 6 of 10. Both its trailing 12-month dividend yield and its forward dividend yield are 1.64%. Over the past three years, the company’s EPS has grown at a rate of 24.1% per year.
Diamond Hill Capital (Trades, Portfolio) is the largest guru shareholder with 1.5% of outstanding shares. This represents 0.55% of its total assets managed. In total, eight gurus have positions in Endurance Specialty.
Gabelli purchased 184,596 shares of Liberty Expedia Holdings for an average price of $42.49 per share, expanding the portfolio by 0.05%.
Liberty Expedia is a holding company where the majority of its value is derived from its stake in Expedia Inc. (EXPE, Financial) and its subsidiary Bodybuilding.com. It has a market cap of $2.5 billion; its shares were trading around $44.26 on Monday with a P/B ratio of 3.7 and a P/S ratio of 5.9.
Liberty Interactive Corp. (LVNTA, Financial) (QVCA) announced the completion of the split-off of Liberty Expedia in November 2016. Liberty Expedia began trading as an individual entity on Nov. 7.
The Peter Lynch chart below shows the stock is trading significantly above its fair value.
GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 3 of 10. The company does not pay a dividend. Its return on assets (ROA) and return on capital (ROC) are outperforming 94% and 91% of other companies in the global internet content and information industry. In contrast, its return on equity (ROE) underperforms 78% of competitors.
Chris Davis (Trades, Portfolio) is Liberty Expedia’s largest guru shareholder with 0.75% of its outstanding shares, which represents 0.07% of his total assets managed. Gabelli is second with 0.32% and First Eagle Investment (Trades, Portfolio) is third.
Other holdings initiated in the fourth quarter were NXP Semiconductors NV (NXPI, Financial), Alcoa Corp. (AA, Financial) and Baker Hughes Inc. (BHI).
Disclosure: I do not own any stocks mentioned in the article.
Start a free 7-day trial of Premium Membership to GuruFocus.
