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Graham Griffin
Graham Griffin
Articles (63) 

Mario Gabelli Adds to Amazon Holding in 1st Quarter

An overview of the guru's top 5 buys

Mario Gabelli (Trades, Portfolio), founder of GAMCO Investors, released his portfolio for the first quarter of 2020. The top five buys included Amazon.com Inc. (NASDAQ:AMZN), DuPont de Nemours Inc. (NYSE:DD), Baush Health Companies Inc. (NYSE:BHC), Edgewell Personal Care Co. (NYSE:EPC) and Evergy Inc. (EVRG).

Gabelli currently manages a portfolio of 848 stocks, with 34 new positions added this quarter. The portfolio is valued at $8.46 billion with a 3% turnover rate. Gabelli focuses on investing in undervalued stocks that, backed by research, show the potential for growth.

Portfolio overview

Gabelli's top holdings were Sony Corp (NYSE:SNE) with 2.08% of the equity portfolio, Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD) at 1.77% and GATX Corp. (NYSE:GATX) at 1.51%. By weight, his top invested sectors were industrials (30.21%), communication services (14.16%) and financial services (9.70%).

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Amazon

Gabelli's most impactful buy during the first quarter was the addition of 5,641 shares of Amazon, trading at an average price of $1,936.38. The purchase represents an increase of 126.62% in the holding and an overall impact on the portfolio of 0.13%.

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Amazon is known for its online retail platform, cloud-based services and more recently a foray into in-house digital media production. Over the last several years, the company has seen a rapid increase in popularity drastically increasing prices and can continuously be seen featured on the Most Active Stocks list on GuruFocus. As of May 18, the stock was trading at $2,424.99 per share with a market cap of $1.21 trillion.

GuruFocus gives the company a valuation rank of 1 out of 10 and the Peter Lynch chart shows the stock trading above its intrinsic value, suggesting that it is overvalued.

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Amazon also has a financial strength rating of 6 out of 10 with a cash-to-debt ratio of 0.77, which is higher than 61.02% of the cyclical retail industry. A profitability rank of 8 out of 10 is awarded thanks to a return on equity of 18.51% and a three-year revenue growth rate of 25.6, which is higher than 91.48% of the industry.

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DuPont De Nemours9

Gabelli also bought 304,367 shares of DuPont De Nemours, continuing on his trend of purchasing the stock since the second quarter of 2019. The purchase represented a 67.02% increase in the holding at an average price of $49.25 during the quarter.

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Dupont de Nemours, commonly known as Dupont, was formed by the merger of Dow Chemical and DuPont in August 2017. Prior to spinning off separate companies, it was a top chemical company in terms of sales. As of May 18, the company was trading at $48.45 per share with a market cap of $35.16 billion.

The holding has gained Gabelli a total estimated return of 17.19%. GuruFocus gives the company a profitablity ranking of 6 out of 10 and a valuation rank of 1 out of 10. A cash-to-debt ratio of 0.09 places the company lower than 87.13% of the industry and an Altman Z-Score of 0.87 suggests the potential for bankruptcy.

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Bausch Health Companies

At an average price of $24.35 during the quarter, Gabelli added 571,103 shares of Bausch Health Companies to his portfolio. This represented a 1,366.28% increase in the holding and an overall 0.10% impract on the portfolio as a whole.

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The Canada-based pharmaceutical company focuses primarily on generic drugs for skin diseases, gastrointestinal disorders, eye health and neurology. On May 18, it was trading at $16.99 per share with a market cap of $6.06 billion.

GuruFocus gives the company a high valuation rank of 9 out of 10 with forward price-earnings ratio of 4.02, which is higher than 95.04% of other drug manufacturing companies. However, an Altman Z-Score of 0.03 places the company deep into the distress zone, indicating the potential for bankruptcy alongside a cash-to-debt ratio of 0.04, which ranks them lover than 94.02% of the industry.

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Edgewell Personal Care

Gabelli increased his holding of Edgewell Personal Care with the purchase of 308,814 shares at an average price of $29.94 per share during the quarter. This represented an increase in the holding by 14.55% and a 0.09% impact on the portfolio.

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The Connecticut-based company foucses on consumer products. The company was formed in 2015 as a spinoff of Energizer Holdings. On May 18, the company was trading at $27 with a market cap of $1.48 billion. The Peter Lynch chart suggests the stock has consistently been trading above its intrinsic value since 2014.

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GuruFocus gives the company a financial strength rating of 4 out of 10. A cash-to-debt ratio of 0.27 scores lower than 58.45% of the industry and an Altman Z-Score of 1.22 places the company in the distress category. However, the company has been decreasing its debt slowly since 2016.

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GuruFocus also provides a profitablity ranking of 7 out of 10 thanks to an expanding operating margin at 12.35%, which is higher than 79.86% of other consumer packaged goods companies. As well the company is awarded a valuation rank of 8 out of 10 with a forward price-earnings ratio of 9.14, which is higher than 92.75% of the industry.

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Evergy

The fifth-largest change in Gabelli's portfolio in the first quarter was the addition of 140,997 shares of Evergy at an average price of $65.83 per share. The represented the growth of the holding by 40.49% and an overall impact on the portfolio of 0.09%.

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Evergy was formed when Westar Energy of Topeka and Great Plains Energy merged. Headquartered in Topeka, Kansas, the company services 1.6 million customers across Kansas and Missouri. The company was trading at $59.07 per share on May 18 with a market cap of $13.35 billion.

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GuruFocus shows three severe warning signs as well as four medium warning signs. The company was given a financial strength rating of 3 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 2 out of 10. The company has a cash-to-debt ratio of 0.03, which is lower than 87.14% of the industry, and an Altman Z-Score of 0.82, suggesting the potential for bankruptcy in the future. The Peter Lynch chart suggests the company is overvalued.

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Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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