According to GuruFocus’ top 10 holdings data, Mario Gabelli (Trades, Portfolio)’s top five holdings as of year-end 2018 were The Madison Square Garden Co. (MSG, Financial), Sony Corp. (SNE, Financial), Bank of New York Mellon Corp. (BK, Financial), Ryman Hospitality Properties Inc. (RHP, Financial) and Twenty-First Century Fox Inc. (FOX, Financial).
With the goal of generating long-term capital appreciation, the guru’s New York-based firm, GAMCO Investors, looks for investment opportunities among undervalued companies that have a catalyst. The renowned investor will be speaking at the 2019 GuruFocus Value Conference.
Madison Square Garden
The guru’s largest position is 794,536 shares of Madison Square Garden, representing 1.8% of the equity portfolio. GuruFocus estimates he has gained 81% on the investment since the third quarter of 2015.
The New York-based sports and entertainment holding company has a $7.06 billion market cap; its shares were trading around $297.31 on Tuesday with a price-earnings ratio of 606.70, a price-book ratio of 2.68 and a price-sales ratio of 4.32.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
Madison Square Garden’s financial strength and profitability and growth were both rated 6 out of 10 by GuruFocus. While the high cash-debt ratio of 11.94 suggests the company is able to pay off its debt, the Altman Z-Score of 4.35 indicates the company is in good fiscal health. In addition, although the company’s margins and returns underperform competitors, the Piotroski F-Score of 6 implies operations are stable.
Of the gurus invested in the company, Gabelli has the largest position with 3.34% of outstanding shares. Other guru shareholders are Jim Simons (Trades, Portfolio)’ Renaissance Technologies, John Rogers (Trades, Portfolio), Ron Baron (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and First Pacific Advisors (Trades, Portfolio).
Sony
Gabelli owns a 4 million-share stake in Sony, which represents 1.64% of the equity portfolio. According to GuruFocus, he has gained an estimated 128% on the investment since the first quarter of 2012.
The Japanese manufacturer of consumer electronics has a market cap of $57.36 billion; its shares were trading around $46.60 on Tuesday with a price-earnings ratio of 8.17, a price-book ratio of 1.72 and a price-sales ratio of 0.77.
According to the Peter Lynch chart, the stock is undervalued.
GuruFocus rated Sony’s financial strength 6 out of 10. Despite issuing approximately 114.3 billion yen ($1.03 billion) in new long-term debt over the last three years, it is at a manageable level as a result of adequate interest coverage. Due to recording a decline in revenue per share and an operating income loss, however, the Altman Z-Score of 0.89 warns the company is at risk of going bankrupt. The company’s profitability and growth scored a 5 out of 10 rating, driven by operating margin expansion, strong returns that outperform industry peers and a moderate Piotroski F-Score of 6. Sony also has a business predictability rank of one out of five stars. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
With 3.29% of outstanding shares, PRIMECAP Management (Trades, Portfolio) is Sony’s largest guru shareholder. Simons’ firm, Cohen, Ainslie, Baron, Zeke Ashton and Joel Greenblatt (Trades, Portfolio) also have positions in the stock.
Bank of New York Mellon
The investor holds 3.9 million shares of Bank of New York Mellon, which accounts for 1.58% of his equity portfolio. GuruFocus estimates he has gained 64% on the investment since second-quarter 2010.
The bank, which is headquartered in New York, has a $49.68 billion market cap; its shares were trading around $52.12 on Tuesday with a price-earnings ratio of 12.91, a price-book ratio of 1.34 and a price-sales ratio of 3.28.
Based on the Peter Lynch chart, the stock appears to be undervalued.
As a result of issuing $12.6 billion in new long-term debt over the last three years, the bank’s financial strength was rated 4 out of 10 by GuruFocus. The company’s profitability and growth fared even worse, scoring a 3 out of 10 rating despite its net margin and return on equity outperforming competitors. The bank also has a one-star business predictability rank.
Warren Buffett (Trades, Portfolio) is the bank’s largest guru shareholder with 8.48% of outstanding shares. Other top guru investors include Dodge & Cox, First Eagle Investment (Trades, Portfolio), Chris Davis (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Bill Nygren (Trades, Portfolio) and Tweedy Browne (Trades, Portfolio).
Ryman Hospitality Properties
Gabelli’s fourth-largest holding is 2.7 million shares of Ryman Hospitality, which has an equity portfolio weight of 1.56%. GuruFocus data indicates he has made an estimated gain of 110% on the investment since fourth-quarter 2012.
The Nashville, Tennessee-based real estate investment trust, which operates hotel, resort and entertainment properties, has a market cap of $4.27 billion; its shares were trading around $83.14 on Tuesday with a price-earnings ratio of 16.15, a price-book ratio of 9.14 and a price-sales ratio of 3.37.
The Peter Lynch chart suggests the stock is overvalued.
GuruFocus rated Ryman Hospitality’s financial strength 4 out of 10. As a result of issuing roughly $509.85 million in new long-term debt over the last three years, the company has poor interest coverage. In addition, the Altman Z-Score of 1.23 warns it is in danger of going bankrupt. The REIT’s profitability and growth scored an 8 out of 10 rating, boosted by an expanding operating margin, strong returns that are outperforming industry peers, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
With 5.39% of outstanding shares, Gabelli is the company’s largest guru shareholder. Simons’ firm, Pioneer Investments (Trades, Portfolio), Davis and Caxton Associates (Trades, Portfolio) are also invested in the stock.
Twenty-First Century Fox
The guru has a 3.7 million-share stake in Twenty-First Century Fox, which accounts for 1.49% of the equity portfolio. According to GuruFocus, Gabelli has made an estimated gain of 45% on the investment since the third quarter of 2013.
Headquartered in New York, the mass media company, which is in the process of being acquired by Disney (DIS, Financial), has a $94.16 billion market cap; its class B shares were trading around $50.56 on Tuesday with a price-earnings ratio of 6.82, a price-book ratio of 2.94 and a price-sales ratio of 3.04.
According to the Peter Lynch chart, the stock is undervalued.
Fox’s financial strength was rated 6 out of 10 by GuruFocus. In addition to having sufficient interest coverage, the Altman Z-Score of 3.95 suggests the company is in good fiscal standing. The company’s profitability and growth scored a 7 out of 10 rating, driven by operating margin expansion, strong returns, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
Of the gurus hoping to cash in on the pending merger, which is expected to close later this month, Yacktman Asset Management (Trades, Portfolio) has the largest stake with 1.16% of outstanding shares. Other guru shareholders include Seth Klarman (Trades, Portfolio), Dodge & Cox, the T Rowe Price Equity Income Fund (Trades, Portfolio), the Yacktman Focused Fund (Trades, Portfolio), the Yacktman Fund (Trades, Portfolio), John Paulson (Trades, Portfolio) and Paul Singer (Trades, Portfolio).
Portfolio composition
His other top holdings as of the end of the fourth quarter were American Express Co. (AXP, Financial), Honeywell International Inc. (HON, Financial), GATX Corp. (GATX, Financial), Kaman Corp. (KAMN, Financial) and Crane Co. (CR, Financial).
Gabelli’s $11.81 billion equity portfolio, which is composed of 779 stocks, is largely invested in the industrials and consumer cyclical sectors. According to GuruFocus data, the Gabelli Asset Fund posted a -7.69% return in 2018. The S&P 500 Index returned -5.97%.
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. The conference will be held at the DoubleTree by Hilton Hotel Omaha Downtown on May 2 and 3. To view the full list of speakers, get more information or register, click here.
Disclosure: No positions.
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