GAMCO Investors’ Mario Gabelli (Trades, Portfolio) acquired 51 new stocks in the third quarter. His top three new holdings are Fleetmatics Group PLC (FLTX, Financial), Joy Global Inc. (JOY, Financial) and Whole Foods Market Inc. (WFM, Financial).
Gabelli founded GAMCO in 1976 as an institutional research firm in New York. He serves as chairman and CEO. As of Sept. 30, the firm managed $39.9 billion in assets. The firm has an investment team of 15 portfolio managers who employ an intense research-driven approach to find undervalued companies. Their three key objectives are: identify a company’s EPS, free cash flow and private wealth management, define the catalyst that will push the price higher and evaluate the management.
The guru bought 697,109 shares of Fleetmatics for an average price of $54.69 per share. The transaction had an impact of 0.3% on the portfolio.
Fleetmatics provides software-as-a-service fleet management solutions. The Irish GPS vehicle tracking company has a market cap of $2.4 billion and an enterprise value of $2.2 billion. It has a price-earnings (P/E) ratio of 77.9, a forward P/E of 28.4, a price-book (P/B) ratio of 7.3 and a price-sales (P/S) ratio of 7.6.
GuruFocus ranked the company’s financial strength 8 of 10. The Piotroski F-Score of 6 and Altman Z-Score of 15.8 suggest the company is financially healthy. It is creating value as it grows because the return on invested capital (ROIC) outperforms the weighted average cost of capital (WACC).
In regard to Fleetmatics’ profitability and growth, GuruFocus gave it a ranking of 6 of 10. It has an operating margin of 10.4% and a net margin of 9.8%. The return on equity (ROE) and return on assets (ROA) outperform 63% and 72% of other companies in the global software-application industry. The return on capital (ROC) outperforms 56% of competitors.
With his purchase, Gabelli became the company’s largest shareholder among the gurus with 1.8% of outstanding shares, which is 0.3% of his total assets managed. RS Investment Management (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also hold positions.
The DCF Calculator gives the stock a fair value of $8.24; it was trading at $60 on Thursday.
Gabelli purchased 259,625 shares of Joy Global for an average price of $26.52 per share. The trade impacted the portfolio by 0.05%. He previously sold out in the second quarter of 2012.
Joy Global manufactures mining equipment and provides related services. The Milwaukee-based company has a market cap of $2.7 billion and an enterprise value of $3.6 billion. It has a forward P/E ratio of 78.1, a P/B ratio of 2.01 and a P/S ratio of 1.1.
GuruFocus ranked the company’s financial strength 4 of 10. The low Piotroski F-Score of 3 and Altman Z-Score of 0.6 suggest the company is in poor condition and in danger of bankruptcy. The ROIC underperforms the WACC so value is being destroyed as the company grows.
For Joy Global’s profitability and growth, GuruFocus provided a ranking of 4 of 10. Both its operating margin and net margin are negative. So are the returns. The ROE and ROA underperform 96% and 94% of other companies in the global farm and construction equipment industry. Similarly, the ROC underperforms 93% of competitors.
Joel Greenblatt (Trades, Portfolio) holds the largest position among the gurus. He owns 1.1% of Joy Global’s outstanding shares, which represents 0.4% of his total assets managed. In total, seven gurus hold positions.
The DCF Calculator gives the stock a fair value of $-150.45; it was trading at $28.05 on Thursday.
Gabelli bought 276,571 shares of Whole Foods Market for an average price of $30.78 per share. The transaction had an impact of 0.05%. He previously sold out in the second quarter of 2015.
Whole Foods Market is a grocery chain that sells natural and organic foods. The company is headquartered in Texas and has a market cap of $9.8 billion and an enterprise value of $10.2 billion. It has a P/E ratio of 19.6, a forward P/E ratio of 20.8, a P/B ratio of 3.01 and a P/S ratio of 0.6.
GuruFocus ranked Whole Foods’ financial strength 7 of 10. It has a Piotroski F-Score of 6 and an Altman Z-Score of 5.5 that suggest the company is financially stable. Since the ROIC outperforms the WACC, value is being created as the company grows.
Whole Foods’ profitability and growth was ranked 7 of 10 by GuruFocus. It has an operating margin of 5.5% and a net margin of 3.2%. The ROE and ROC outperform 77% and 72% of other companies in the global grocery stores industry. Similarly, the ROA outperforms 84% of competitors.
Frank Sands (Trades, Portfolio) has the largest position among the gurus with 3.7% of Whole Foods’ outstanding shares. This represents 0.99% of his total assets managed. In total, 10 gurus hold positions.
The DCF Calculator gives the stock a fair value of $29.5; it was trading at $31 on Thursday.
For all of Gabelli’s current holdings, view his portfolio.
Disclosure: I do not own stock in any companies mentioned in the article.
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