GAMCO leader Mario Gabelli (Trades, Portfolio) disclosed in his third-quarter portfolio that he established 33 new positions.
A renowned value investor, Gabelli, who will be one of the speakers at the 2019 GuruFocus Value Conference next May, and his team pick stocks with the goal of generating long-term capital appreciation.
The guru’s five largest buys for the quarter were Dun & Bradstreet Corp. DNB, SodaStream International Ltd. SODA, CA Inc. CA, Intelsat SA I and LifePoint Health Inc. LPNT.
Dun & Bradstreet
Gabelli invested in 114,500 shares of Dun & Bradsteet for an average price of $135.87 per share, allocating 0.11% of the equity portfolio to the holding.
The Short Hills, New Jersey-based company, which provides commercial data, analytics and insights for businesses, has a market cap of $5.26 billion; its shares were trading around $141.78 on Monday with a price-earnings ratio of 22.28 and a price-sales ratio of 2.92.
The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.
GuruFocus rated Dun & Bradstreet’s financial strength 4 out of 10 despite the company having sufficient interest coverage and a stable Altman Z-Score of 4.97. The company’s profitability and growth scored a 7 out of 10 rating. While the operating margin is in decline, it still outperforms 95% of competitors. The company also has a moderate Piotroski F-Score of 6, suggesting conditions are good, and a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 1.1 % per year.
Of the gurus invested in Dun & Bradstreet, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position with 2.29% of outstanding shares. Dodge & Cox, Joel Greenblatt (Trades, Portfolio), John Rogers (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), David Dreman (Trades, Portfolio), John Hussman (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss are also shareholders.
SodaStream
The investor picked up 87,800 shares of SodaStream for an average price of $120.18 per share, dedicating 0.09% of the equity portfolio to the position. He previously sold out of the stock in the third quarter of 2012.
Headquartered in Israel, the company, which makes home beverage carbonation systems, has a $3.25 billion market cap; its shares were trading around $143.17 on Monday with a price-earnings ratio of 36.34, a price-book ratio of 5.86 and a price-sales ratio of 5.34.
According to the Peter Lynch chart, the stock is overpriced.
As a result of no debt, comfortable interest coverage and a high Altman Z-Score of 17.48, SodaStream’s financial strength was rated 9 out of 10 by GuruFocus. The company’s profitability and growth scored a 7 out of 10 rating, supported by an expanding operating margin, good returns and a strong Piotroski F-Score of 8.
With 7.22% of outstanding shares, Simons’ firm is the company’s largest guru shareholder. Sarah Ketterer (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) also own the stock.
CA Inc.
The guru purchased 270,775 shares of CA for an average price of $43 per share, giving it 0.08% space in the equity portfolio.
The information technology software company, which is based in New York City, was acquired by Broadcom Inc. AVGO on Nov. 5. The $18.9 billion all-cash deal was announced in July. With an $18.58 billion market cap, the stock closed at $44.44 on its last day of trading.
Other gurus who benefited from the deal were Pioneer Investments (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Greenblatt, John Buckingham (Trades, Portfolio), Grantham and Dreman.
Intelsat
Having previously exited a position in Intelsat in the third quarter of 2015, Gabelli established a new 337,015-share holding for an average price of $21.87 per share. The trade had an impact of 0.07% on the equity portfolio.
The Luxembourg-based satellite telecommunications company has a market cap of $3.63 billion; its shares were trading around $25.86 on Monday with a forward price-earnings ratio of 71.43 and a price-sales ratio of 1.53.
Based on the median price-sales chart, the stock appears to be trading higher than its historical value.
Hurt by poor interest coverage and a low Altman Z-Score of -0.18, which indicates a possibility of bankruptcy, Intelsat’s financial strength was rated 3 out of 10 by GuruFocus. The company’s profitability and strength fared a bit better, scoring a 5 out of 10 rating. Although the operating margin is in decline, it still outperforms 97% of industry peers. The company has a moderate Piotroski F-Score of 5, which indicates business conditions are stable. It also has poor returns and has seen its revenue per share decline over the last five years.
George Soros (Trades, Portfolio) is the company’s largest guru shareholder with 1.33% of outstanding shares. Simons and Greenblatt also hold the stock.
LifePoint Health
Gabelli bought 157,220 shares of LifePoint for an average price of $60.93 per share, allocating 0.07% of the equity portfolio to the position.
Based in Brentwood, Tennessee, the company owns and operates a number of community hospitals, regional health systems, physician practices, outpatient centers and post-acute facilities throughout the U.S. It has a $2.51 billion market cap; its shares were trading around $64.87 on Monday with a price-earnings ratio of 58.45, a price-book ratio of 1.09 and a price-sales ratio of 0.35.
The Peter Lynch chart suggests the stock is overpriced.
GuruFocus rated LifePoint’s financial strength 5 out of 10. In addition to having poor interest coverage, the Altman Z-Score of 2.16 indicates the company is at risk of going bankrupt. The company’s profitability and growth fared much better with a 9 out of 10 rating. While the company has declining margins and poor returns, its Piotroski F-Score of 7 suggests operations are stable. The company also has a five-star business predictability rank, meaning it sees its stock price gain an average of 12.1% per year. The rank is on watch, however, despite having consistent earnings and revenue growth.
With 3.93% of outstanding shares, Diamond Hill Capital (Trades, Portfolio) is the company’s largest guru shareholder. Hotchkis & Wiley, Steven Cohen (Trades, Portfolio), the Vanguard Health Care Fund (Trades, Portfolio), Greenblatt, Dalio and Dreman also have positions in the stock.
Other trades
During the quarter, Gabelli also established positions in Syntel Inc. SYNT, Eagle Bancorp Inc. EGBN, ProShares Short S&P500 SH, XO Group Inc. XOXO, Aspen Insurance Holdings Ltd. AHL and many other companies.
The investor’s $14.75 billion portfolio, which is composed of 817 stocks, is largely invested in the industrials and consumer cyclical sectors. According to GuruFocus data, the Gabelli Asset Fund AAA slightly underperformed the S&P 500 in 2017 with a return of 20.16%. The index returned 21.71%.
As mentioned above, Gabelli will speak at the 2019 GuruFocus Value Conference in Omaha, Nebraska, joining gurus Chuck Royce (Trades, Portfolio) and Francisco GarcĂ Âa ParamĂ©s (Trades, Portfolio). The conference will be held at the DoubleTree by Hilton Hotel Omaha Downtown on May 2 and 3, 2019. To view the full list of speakers, get more information or register, click here.
Disclosure: No positions.
Read more here:
