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Mario Gabelli's Top 5 2nd-Quarter Buys

GAMCO Investors releases its equity portfolio updates

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Margaret Moran
Aug 31, 2021

Summary

  • The firm’s top buys for the quarter were Grupo Televisa, Sinclair Broadcast Group, U.S. Concrete, Valmont Industries and Corteva.
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Mario Gabelli (Trades, Portfolio)’s GAMCO Investors recently released its 13F filing for the second quarter of 2021, which ended on June 30.

Gabelli founded GAMCO Investors (previously known as Gabelli Asset Management) in 1976. Originally an institutional research firm, the company has since evolved into a diversified global financial services company with a wide range of investing activities. However, the company credits its success in all of its investing endeavors to a focus on fundamental bottom-up research, a consistent investment process and maintaining a healthy risk-reward ratio.

According its latest 13F filing, the firm’s top five buys for the quarter were Grupo Televisa SAB (

TV, Financial), Sinclair Broadcast Group Inc. (SBGI, Financial), U.S. Concrete Inc. (USCR, Financial), Valmont Industries Inc. (VMI, Financial) and Corteva Inc. (CTVA, Financial).

Grupo Televisa

The firm added 1,204,575 shares, or 25.41%, to its investment in Grupo Televisa SAB (

TV, Financial) for a total of 5,944,690 shares. The trade had a 0.15% impact on the equity portfolio. During the quarter, shares traded for an average price of $12.73.

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Grupo Televisa is a Latin American mass media company headquartered in Mexico City. It operates a variety of media and entertainment businesses and is the largest media company in the Spanish-speaking world.

On Aug. 31, shares of Grupo Televisa traded around $13.13 for a market cap of $7.34 billion. According to the GuruFocus Value chart, the stock is significantly overvalued.

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The company has a financial strength rating of 3 out of 10 and a profitability rating of 7 out of 10. The Altman Z-Score of 1.6 indicates the company could be in danger of bankruptcy, though the Piotroski F-Score of 8 out of 9 is typical of a financially stable company. The three-year revenue per share growth rate is 0.3%, while the three-year Ebitda per share growth rate is -2%.

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Sinclair Broadcast Group

The firm also upped its stake in Sinclair Broadcast Group (

SBGI, Financial) by 405,200 shares, or 20.39%, for a total of 2,392,173 shares. The trade had a 0.11% impact on the equity portfolio. Shares traded for an average price of $32.28 during the quarter.

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Based on Cockeysville, Maryland, Sinclair Broadcast Group is an American telecommunications company that is controlled by the descendants of founder Julian Smith Sinclair. It provides local sports and news through 186 TV stations and 620 channels.

On Aug. 31, shares of Sinclair traded around $30.01 for a market cap of $2.27 billion. According to the GF Value chart, the stock is a possible value trap.

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The company has a financial strength rating of 2 out of 10 and a profitability rating of 7 out of 10. The interest coverage ratio of 0.73 and Altman Z-Score of -0.4 suggest the company will likely need to raise additional liquidity in order to avoid bankruptcy. The return on invested capital is currently below the weighted average cost of capital, indicating value destruction, though looking at past quarters, the company is just as often in value creation territory.

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U.S. Concrete

The firm’s top new buy for the quarter was U.S. Concrete (

USCR, Financial). It picked up 161,173 shares of the stock, giving it a 0.10% weight in the equity portfolio. During the quarter, shares traded for an average price of $64.75.

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U.S. Concrete is an American concrete company based in Euless, Texas. It provides concrete, ready-mix concrete and heavy construction aggregates for major construction markets in North America. On Aug. 26, the company was acquired by Vulcan Materials Co. (VMC) in an all-cash deal.

On Aug. 31, shares of Vulcan Materials, which U.S. Concrete is now a part of, traded around $185.93 for a market cap of $24.67 billion. According to the GF Value chart, the stock is modestly overvalued.

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The company has a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10. The Piotroski f-Score of 6 out of 9 and Altman Z-Score of 4.12 show the company is financially stable. The three-year revenue per share growth rate is 8.1%, while the three-year Ebitda per share growth rate is 10.3%.1432812258865451008.png

Valmont Industries

The firm added 46,950 shares, or 114.09%, to its investment in Valmont Industries (

VMI, Financial) for a total of 88,100 shares. The trade had a 0.10% impact on the equity portfolio. Shares traded for an average price of $241.99 during the quarter.

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Valmont Industries is a manufacturing company that produces Valley center pivot and linear irrigation equipment, windmill support structures, lighting and traffic poles and steel utility poles. It is headquartered in Omaha, Nebraska.

On Aug. 31, shares of Valmont traded around $248.86 for a market cap of $5.28 billion. According to the GF Value chart, the stock is significantly overvalued.

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The company has a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10. The cash-debt ratio of 0.19 is lower than 86% of industry peers, though the interest coverage ratio of 6.65 shows the debt level is under control. The ROIC is typically higher than the WACC, meaning the company is creating value for shareholders.

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Corteva

The firm increased its Corteva (

CTVA, Financial) holding by 196,105 shares, or 827.34%, for a total of 219,808 shares. The trade had a 0.07% impact on the equity portfolio. During the quarter, shares traded for an average price of $46.20.

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Spun out of Dupont de Nemours (DD) in 2017, Corteva is an agricultural chemical and seed company based in Wilmington, Delaware. It provides farmers around the world with seeds, crop protection and digital service solutions.

On Aug. 31, shares of Corteva traded around $43.97 for a market cap of $32.28 billion. According to the Peter Lynch chart, the stock is trading above its intrinsic value but below its median historical valuation.

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The company has a financial strength rating of 5 out of 10 and a profitability rating of 3 out of 10. The interest coverage ratio of 31.86 and Piotroski F-Score of 8 out of 9 show a very healthy financial situation. The ROIC surpassed the WACC in the most recent quarter, indicating a turn to profitability that coincides with the beginning of the growing season in many areas.

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Portfolio overview

As of the quarter’s end, the firm’s common stock equity portfolio consisted of 899 stocks valued at a total of $11.79 billion. The top holdings were Herc Holdings Inc. (HRI) with 2.47% of the equity portfolio, Sony Group Corp. (SONY) with 1.59% and American Express Co. (AXP) with 1.43%.

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In terms of sector weighting, the firm was most invested in industrials, followed distantly by communication services and consumer cyclical.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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 SEC filings for the quarter in question and may not include non-U.S.-listed international stocks or changes made after the quarter ended.
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