Mario Gabelli is one of the most successful value investors not named Warren Buffett. His hedge fund, GAMCO, has generated impressive returns across its investment funds for more than 45 years. Gabelli himself has earned billions through investing and investment management.
We’ll take a look at some of Mario Gabelli’s best all-time stock picks to understand how he has achieved such sustained success as a value investor.
Who is Mario Gabelli?
Mario Gabelli is an American investor who founded the investment management firm GAMCO in 1977. Gabelli has said in interviews that he became interested in the stock market after reading analyst reports as a child.
Gabelli began his investment career in the early 1970s with brokerage firm Loeb, Rhoades & Co. He left to found Gabelli & Co., a brokerage, in 1976 and soon also launched Gabelli Investors, which later became GAMCO.
Gabelli’s first public mutual fund was the Gabelli Asset Fund, which launched in 1986. A decade later, Gabelli’s firm managed more than $16 billion in assets, and he was honored as the domestic equity fund manager of the year by Morningstar in 1997.
Today, at age 80, Gabelli continues to serve as the chairman and CEO of GAMCO.
Mario Gabelli Investment Style
Mario Gabelli is a value investor in the style of Warren Buffett. His approach is to find strong companies that have wide moats and excellent long-term business models. Gabelli has repeatedly discussed his interest in industries that provide tangible value, which is why many of his largest investments are focused on industrial companies.
Gabelli then seeks to invest when those companies become undervalued due to the ups and downs of the market. He occasionally invests around mergers and acquisitions, using these as catalysts that can cause a stock to be undervalued.
Mario Gabelli Stock Picks
GAMCO releases information about its stock picks through 13F filings with the SEC. These offer insight into some of Gabelli’s most significant stock picks over the past few decades.
Gabelli’s hedge fund GAMO began investing Herc Holdings in 2016, shortly after it was spun off by car rental company Hertz. Herc Holdings focuses on industrial and construction equipment rentals, and Gabelli said at the time that he saw potential in the company in part because of the US’s increasing need for new infrastructure.
By late 2016, GAMCO owned a 12.51% stake in Herc Holdings. The fund continued to increase its stake until the pandemic struck in 2020, when Gabelli began to sell off shares even as Herc stock skyrocketed. The stock was valued around $35 when Gabelli initially invested in 2016 and reached a high of $194 in October 2021.
GAMCO continues to hold a $282 million position in Herc, which could continue to pay off as funding from the federal Infrastructure Investment and Jobs Act kicks in over the next few years.
Although Gabelli is best known as a value investor, he hasn’t entirely shied away from growth stocks. Some of GAMCO’s largest holdings are in tech companies including Apple, Microsoft, Google, and Facebook.
GAMCO first took a stake in Apple in 2009, not long after the company rolled out the first iPhone. The fund’s portfolio has repeatedly bought Apple shares over the past decade, most recently in 2021.
GAMCO sold more than 20% of its Apple shares around the market peak in 2022. All of the fund’s buys and sells on Apple have netted GAMCO more than 1,550% in profit. The fund still holds a $23.8 million share in Apple.
Gabelli and GAMCO bought more than half a million shares in GATX Corporation from 2010-2011 and another 385,000 shares in 2016. GATX is similar in nature to Gabelli’s bet on Herc Holdings. This company leases specialized railcars for transporting petroleum, chemicals, and agricultural products to railways.
Shares were priced at $34 when GAMCO bought GATX in 2010-2011 and $44 in 2016. Today, they’re priced at $112 – roughly a 300% gain for Gabelli’s initial investment. GATX remains one of the largest holdings in the GAMCO portfolio today, worth around $176 million.
GAMCO invested heavily in electronics maker Sony from 2013-2015, accumulating more than 6.2 million shares by late 2015 at an average price of around $18 per share. At the time, Gabelli said that he liked Sony for its video game content and growing expertise in artificial intelligence and virtual reality.
GAMCO has been slowly reducing its position in Sony since 2016, with the biggest sale of 542,000 shares in May 2020. At that time, Sony shares traded for $62 apiece, representing a 245% gain for Gabelli. Today, GAMCO continues to hold 1.7 million shares of Sony, which is priced at $106.
Mueller Industries is another major investment in GAMCO’s portfolio today. Gabelli first began investing in the company in 2010, accumulating several million shares by 2016 at an average price of around $27 per share.
GAMCO has sold off Mueller Industries shares in small increments for the past 6 years, but continues to hold 2.6 million shares valued at $172 million. Mueller Industries stock currently trades at $66 per share, representing a 145% gain.
Gabelli purchased more than 3.5 million shares of American Express – one of Warren Buffett’s favorite companies – in 2001 when the company’s stock dropped to around $35 in the midst of the dotcom bubble. He bought and sold another 3 million shares in 2003 for a quick profit as the stock recovered.
GAMCO has been steadily selling shares since 2010. The fund’s portfolio still holds around 828,000 shares worth an estimated $128 million. American Express stock is currently trading at $155 – a 340% gain for Gabelli’s original investment.
In 2001, GAMCO took a $125 million stake in Crane Holdings, an industrial conglomerate involved in aerospace engineering, fiberglass production, currency printing, and industrial control systems.
After a series of sales over the past decade, GAMCO continues to hold 1.45 million shares, or about one-quarter of its original stake. Crane Holdings stock is today worth $108 per share, a 315% gain from 2001.
Mario Gabelli Lifetime Performance
There are no estimates of Mario Gabelli’s or GAMCO’s total performance since launching the fund in 1976. However, GAMCO does publish lifetime performance statistics for individual funds.
All except for two of GAMCO’s currently available mutual funds have produced positive returns for investors. The Gabelli Small Cap Growth Fund and Gabelli Asset Fund have each produced average annualized returns of more than 11% for at least 30 years each. Five additional funds have generated average annualized returns of more than 8% for at least 25 years each.
Gabelli himself is thought to be worth around $1.8 billion. GAMCO has $33 billion in assets under management.
Conclusion: Mario Gabelli Stock Picks
Mario Gabelli is the founder of the investment firm GAMCO and an incredibly successful value investor. Gabelli has made many impressive investments, but some of his biggest wins include companies like Herc Holdings, American Express, GATX, and Sony. Today, his firm manages more than $33 billion in assets, and Gabelli himself is worth nearly $2 billion.