Top value investor Mario Gabelli says the way to make money in the financial sector is by investing in smaller, local banks. Gabelli tells FOX Business Network that he sees a round of consolidation coming for the sector, from which small, local bank shares will benefit. He’s less enthusiastic about money center banks, he says. Gabelli also talks about his bottom-up investing approach, fourth-quarter earnings, and why he’s excited about potential spin-offs.
Value investing guru Mario Gabelli is finding value in some intriguing areas of the market, including the auto and health and wellness industries. Gabelli tells Fox Business Network how he tries to balance long-term and short-term factors. “We try to look out over the next 10 years, what sectors will work,” he says. “For example the rising middle class in India and China and what does that mean for companies like Boeing and what does it mean for global consumption and the economy. We also try to think out in the United States, health and wellness, how do we eat better? Organic, natural foods. But at the same time you’ve got to think about what’s going to happen tomorrow. You want to be aware of the sugar high that we’ve had since Bernanke gave us QE2 and how does that wear off and who and what and how do we maintain that.” Gabelli also talks about his bottom up investing approach, and why he thinks the beverage industry is a great place to look for opportunities.
Top value strategist Mario Gabelli says that if he were Warren Buffett, he would be looking to purchase companies with some very specific characteristics. Gabelli tells Bloomberg that he’d target companies with “cash flow, sustainability, and a U.S. base that have global earnings power and that can index with inflation”. What might such a company look like? “If you bought Heinz, you could buy a cereal manufacturer,” he speculated. Gabelli also talks about Berkshire’s portfolio construction, and some of its core holdings.
Top value investor Mario Gabelli says he is finding “great ideas” in the stock market right now. “This is going to be an extraordinarily exciting year to find stocks and we are enthusiastic all the time because when we look … we continue to find great ideas,” Gabelli tells FOX Business Network. “Financial engineering is alive and well — Heinz, Dell, these are things that stimulate the appetites.” Gabelli says that while Europe’s troubles are a concern, other bullish factors are superceding them. “The recovery in Europe is fragile. There clearly will be some potholes for the market. Within the framework there are three things that are trumping that short term: [Federal Reserve Chairman Ben] Bernanke, [European Central Bank President Mario] Draghi and Kuroda, the head of the bank of Japan. They’re just pumping money into the system which makes this an exciting time to pick stocks.”
Top value investor Mario Gabelli is finding value in the market, but he’s concerned about the “three Fs”: food, fuel, and the fiscal cliff. In a Bloomberg interview, Gabelli talks about broader strategy and some individual companies he’s high on. He also says that one bright spot right now is that whoever wins the Presidential election, it appears corporate tax rates will decline.
Top value investor Mario Gabelli says he doesn’t think the stock market will do much between now and year-end. Gabelli tells Bloomberg that the U.S. needs to address its budget issues to put itself back on the path to prosperity, but says he’s more concerned with looking at individual companies that are good investments. He also talks about some companies that he thinks are good takeover targets.
Value investing guru Mario Gabelli says a number of factors are pushing and pulling on stocks right now, and recently discussed some of those issues with Bloomberg. Gabelli says about 20% of S&P 500 companies’ earnings come from Europe, and that first quarter results and second quarter estimates for those European earnings are likely to be “bleak”. He also says the end of the Federal Reserve’s “Operation Twist”, and the “fiscal cliff” facing the U.S. in 2013, are going to weigh on investors in the coming two or three months. On the other side, he notes that bond yields are falling again and offering little competition for stocks, and that many pension funds are underinvested in U.S. stocks and need to ramp up their exposure. Gabelli also discusses some of his favorite stocks, and why he prefers them over Apple.
Value investing guru Mario Gabelli says companies that spin off parts of their businesses are a prime area to look for good investments.
Gabelli tells CNBC that he likes investing in companies that have a history of splitting off successful businesses, or which could split off businesses. Then he invests in both firms. “How do you take a company and take its capital and move it to its highest rate of return? Split-ups are an example of that,” he says. “We look at finding the company that was spun off and say, is this attractive?”
Gabelli offers examples of some prominent spin-offs he’s profited from, including Fortune Brands and Xylem. And he talks about one company he’s hoping will spin-off part of its business: PepsiCo.
Top value investor Mario Gabelli is high on stocks in the automobile, cloud computing, and snack food industries in 2012.
Speaking as part of Barron’s 2012 Roundtable, Gabelli says big growth in auto sales in China, as well as an aging fleet of existing vehicles and the need for different types of trucks due to the widening of the Panama Canal, bode well for a number of auto stocks. Among the picks he likes are Genuine Parts, a replacement auto parts maker, and Navistar International, which sells trucks and buses.
In the cloud computer arena, Gabelli likes firms that “provide co-location services, allowing you to place your computer in their facility.” Among his picks: Internap Network Services and Cincinnati Bell. He’s also interested in the snack food industry, where he sees several potential spinoff possibilities and acquisition targets. Snyder’s-Lance is one firm he thinks could benefit from being acquired.
Gabelli also likes “financial engineering” plays, including spinoffs like Fortune Brands Home & Security (as well as its former parent, Beam).
This portion of the Roundtable also includes 2012 forecasts from several other prominent investors, including PIMCO bond guru Bill Gross. “A titanic struggle is occurring between delevering and reflating on the part of the central banks,” Gross says. “Reflation has been successful, but in some ways the Fed has gone too far. The central bank’s role is to promote liquidity and preserve credit extension throughout the economy, but they have allowed too much risky credit to be created in the process.”
Gross says that “if the economy is threatened by delevering, which could lead to inflation or deflation, we are going to experience financial repression for the next five to 15 years. It is a necessary condition.” His tips to avoid that repression: Invest in certain closed-end funds that can borrow money at 0.25% rates, and lend it out safely at 4%, 5%, or 6%. He also likes some high-yielding utility stocks and some state bonds that are on the safer side.
Top value investor Mario Gabelli says increased efforts in the shale and natural gas arenas would help spur job growth, make the U.S. less dependent on imports for energy, and help with the country’s deficit. Gabelli also tells FOX Business Network that tax reform is key to helping American competitiveness, and says he’s finding interesting opportunities in utilities right now. He adds that he does not expect China’s economy to have a “hard landing”.