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Holly LaFon
Holly LaFon
Articles (10163)  | Author's Website |

Mario Gabelli's Top 5 New Stock Buys of Q4

February 05, 2015 | About:

GAMCO Investors, Mario Gabelli (Trades, Portfolio)’s, purchased 32 stocks in the fourth quarter, for 3% turnover in its portfolio of 861 stocks.

At fourth quarter-end, GAMCO had assets under management of $47.5 billion. The company described its guiding two-pronged investing approach in its fourth quarter letter:

“…We are fundamentally bottom up stock pickers. We have chosen to focus on the companies in a subset of industries in which sustainable competitive advantages can be cultivated. Volatile and unpredictable crude prices, for example, are reasons we tend to avoid the energy sector and gravitate to less commoditized industries.

Managers added:

“Our contribution to the body of work begun by Benjamin Graham and David Dodd has been the concept of Private Market Value (PMV) with a CatalystTM – we seek businesses selling in the public markets at a substantial discount to their PMVs and for which we can identify one or more events that will narrow that discount. We tend to gravitate toward hard assets and cash flow and away from visions of grandeur that may or may not occur in the future.”

The most highlighted sector at GAMCO at quarter-end was Consumer Cyclical, which represented 24.6% of the portfolio. Industrials followed, representing 21.5% of the portfolio.

Gabelli’s five largest new stock buys of the fourth quarter were: Cubist Pharmaceuticals Inc. (CBST), Chiquita Brands International Inc. (CQB), PetSmart Inc. (PETM), Volcano Corp (VOLC) and Covance Inc. (CVD).

Cubist Pharmaceuticals Inc. (CBST)

Gabelli purchased 236,700 shares of Cubist Pharmaceuticals, a 0.12% portfolio holding. Cubist Pharmaceuticals’ share price averaged $77 in the fourth quarter.

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Cubist Pharmaceuticals Inc. was incorporated as a Delaware corporation in 1992. Cubist Pharmaceuticals Inc. has a market cap of $7.68 billion; its shares were traded at around $101.94 with a P/E ratio of 126.00 and P/S ratio of 7.23.

Chiquita Brands International Inc. (CQB)

Gabelli purchased 970,500 shares of Chiquita Brands International Inc., a 0.073% portfolio position. The stock’s quarterly average price was $14.

03May20171155331493830533.png

Chiquita Brands International operate as a marketer and distributor of bananas and pineapples sold under the Chiquita and other brand names in nearly 70 countries packaged salads sold under the Fresh Express and other brand names primarily in the United States. Chiquita Brands International Inc. has a market cap of $681.244 million; its shares were traded at around $14.49 with and P/S ratio of 0.22.

PetSmart Inc. (PETM)

Gabelli purchased 131,800 shares of PetSmart, a 0.056% portfolio position. The stock’s quarterly average price was $74.

03May20171155331493830533.png

PetSmart Inc. was incorporated in the State of Delaware in 1986. PetSmart Inc. has a market cap of $8.21 billion; its shares were traded at around $82.55 with a P/E ratio of 19.60 and P/S ratio of 1.20. The dividend yield of PetSmart Inc. stocks is 0.90%. PetSmart Inc. had an annual average earnings growth of 14.00% over the past 10 years. GuruFocus rated PetSmart Inc. the business predictability rank of 5-star.

Volcano Corp (VOLC)

Gabelli purchased 572,500 shares of Volcano Corp, a 0.053% portfolio holding. The stock’s fourth quarter quarterly price averaged $12.

03May20171155341493830534.png

Volcano Corp incorporated in the state of Delaware in January 2000. Volcano Corp has a market cap of $927.31 million; its shares were traded at around $17.99 with and P/S ratio of 2.36.

Covance Inc. (CVD)

Gabelli purchased 81,200 shares of Covance Inc., a 0.044% portfolio holding. The stock’s quarterly price averaged $94.

03May20171155341493830534.png

Covance Inc. is a Delaware Corporation, founded in 1987. Covance Inc. has a market cap of $6.03 billion; its shares were traded at around $106.53 with a P/E ratio of 34.0 and P/S ratio of 2.30. Covance Inc. had an annual average earnings growth of 3.80% over the past 10 years. GuruFocus rated Covance Inc. the business predictability rank of 2-star.

See more Gabelli stocks at his portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 5.0/5 (1 vote)

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Comments

SerenityStocks
SerenityStocks - 5 years ago    Report SPAM

Benjamin Graham actually emphasized that the secret of sound investment was the "Margin of Safety".

Warren Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface, which Buffett wrote).

In The Intelligent Investor, Benjamin Graham recommended various categories of stocks - Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

For example, given below are the actual Graham ratings for Petsmart Inc (PETM), with no adjustments other than those for inflation.

Defensive Graham investment requires that all ratings be 100% or more.
Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

Petsmart Inc - Graham Ratings
Sales | Size (100% ⇒ $500 Million): 1,384.00%
Current Assets ÷ [2 x Current Liabilities]: 82.98%
Net Current Assets ÷ Long Term Debt: 116.01%
Earnings Stability (100% ⇒ 10 Years): 100.00%
Dividend Record (100% ⇒ 20 Years): 55.00%
Earnings Growth (100% ⇒ 30% Growth): 210.50%
Graham Number ÷ Previous Close: 34.81%

The Final Graham Assessment for Petsmart Inc is also given below.
The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

Petsmart Inc - Final Graham Assessment
Defensive Price (Graham Number): $28.72
Enterprising Price (Serenity Number): $22.63
NCAV Price: $-1.09
Qualitative Result: Good / Enterprising
Intrinsic Value: $22.63
Previous Close: $82.50
Quantitative Result: 27.43%

Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

Even when stocks don't clear them completely, Graham's rules give a clear and quantifiable frame of reference for comparison.

http://www.gurufocus.com/news/262827 shows how one can assess 5000+ NYSE and NASDAQ stocks by an exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.

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