Massive amounts of funds have flowed into
in recent years. His firm, GAMCO investors, announced this week
that its assets under management have surged to a record $40.1
billion, after hitting $36.4 billion at the end of 2012, which
marked the fifth straight year of growth. His pronounced success
beating the market likely accounts for drawing the new clients.
In 2012, he delivered a 16.9% gross return and 16.3% return net
of fees, compared to the S&P 500's 16%. The longer-term track
record is 16.7% gross and approximately 15.8% net of fees from
1977 through 2012, placing him in rarefied territory. "We ask
anyone to find another asset management organization, unlevered
and tax sensitive, and demonstrate how they matched or exceeded
this return over a comparable period," Gabelli challenges in his
2012 annual report.
Unraveling his secret requires little research. He clearly
attributes his record to "Our Graham, Dodd, Murray (and now
Greenwald) roadmap as well as a terrific stock market since we
started the firm (ignoring 1977-81, '87, '90, '94, 2001-2002,
2008)" in his 2012 report.
The remainder of his annual report dismisses passing fads such as
the current "dynamic trading," and re-affirms the efficacy of
tried-and-true fundamental research, or his trademark Private
Market Value (PMV) with a Catalyst stock selection process.
Gabelli also generally keeps turnover in his value-based mutual
funds low. Last year, his Asset fund had turnover of 4%, while
funds involving with merger and acquisition activity had higher
turnover rates - one as high as 256%.
As far as his outlook for the markets, Gabelli expected money
from U.S. fixed-income markets to begin flowing into common
stocks in 2013. A fixture of financial television broadcasting,
Gabelli in February proclaimed on CNBC's
that two stocks would double in a reasonable period: Gencorp (
) and Legg Mason (
In the context that Gabelli holds stocks in his main fund for 12
years on average, he picked 41 new ones in the first quarter, for
his total holding of 793 stocks and a 6% quarter-over-quarter
turnover, consistent with his typical behavior.
According to GuruFocus'
for Gabelli, the following topped his list of new buys: Dell Inc.
), Acme Packet (
) and Boulder Brands Inc. (
purchased 2,191,410 shares of Dell Inc. for $13 per share on
average in the first quarter of 2013. The stock has increased
0.4% from his average price.
Dell is currently engaged in a battle between founder and CEO
Michael Dell, who want to acquire the company, and hedge fund
gurus and shareholders, who for the most part want a higher price
per share than Dell is offering.
Just today, activist investor Carl Icahn announced he plans to
nominate his own board members to the company to change its
direction. In a plan devised with guru Southeastern Asset
Management led by Mason Hawkins, he is demanding shareholders
receive $12 per share cash dividend, or $12 worth of shares
priced at $1.65 per share.
Previously, Icahn had offered $15 per share for the whole
company, a counter to Michael Dell's $13.65 per share offer in
February to take the company private.
The gurus, who together own about 13% of the company, have been
fighting furiously for what they believe is a more fair price for
the company than Dell and private equity firm Silver Light
initially offered. "Either give shareholders the real choice they
are entitled to or face the legal liability for your failures,"
they wrote in a joint letter to Dell on Friday.
Dell's shares have responded to the fracas by gaining 33% year to
date. In 2012, worries about continued weakness the company's PC
sales caused shares to falter to a multi-year low of $9 in
Dell's revenue has declined over the past 12 months, and it has
issued $4.2 billion in debt over the past three years, problems
GuruFocus ranks as medium in severity. The company continues to
have a solid balance sheet, however, with more than $13.6 billion
in cash, although reserves shrank from $14.6 billion in fiscal
Dell's ratios: P/E 9.9, P/B 2.2 and P/S 0.40.
Acme Packet (
Gabelli bought 851,100 shares of Acme Packet Inc. for his
second-largest new holding in the first quarter. The position is
valued at $24.9 million on Friday and is equivalent to 1.26% of
Acme Packet was a mergers and acquisitions play for Gabelli. The
company was acquired on March 28 by Oracle (
). Oracle paid $29.25 per share in cash, a total of $2.1 billion
in fully diluted equity value, for the company. Oracle announced
the deal on Feb. 4. Acme Packet said the merger would "accelerate
the migration to all-IP networks by enabling secure and reliable
communications from any device, across any network," and their
board unanimously approved the transaction. Shares shot from
$23.39 the day before the deal's announcement, to near the
purchase price of just over $29 coinciding with the deal's
Boulder Brands Inc. (
Gabelli bought 2,712,359 shares of Bounder brands at an average
price of $12 per share in the first quarter. After the purchase,
he owns 4.56% of the company. Shares trade at 16% below his
average purchase price on Friday, or $9.70 per share.
Boulder Brands owns a number of health food brands, including
recognized names Smart Balance, Earth Balance and Bestlife, and
has made significant inroads into the gluten-free markets. Its
market cap has topped $557 million.
Gabelli may have jumped on the company's several-dollar drop at
the end of February (approximately 12% on Feb. 28) when it
announced quarterly earnings. Even with the drop, from which its
price has yet to recover, the shares have gained 83% in the
trailing 12 months.
Although fourth-quarter earnings per share of $0.06 beat
estimates and revenues increased 34.7% to $113 million, in line
with estimates, the company was plagued by a critical report from
Prescience Point accusing it of accounting manipulation.
Prescience assigned the shares a $4 intrinsic value and said
Smart Balance patents would expire in about two years.
Another embattled stock, short interest has increased to
8,865,859 on last report dated April 30, from 2,597,646 almost a
GuruFocus finds the company has four warnings signs, for gross
margin in long-term decline, operating margin in five-year
decline, debt issuances for three years and inventory building
up. It also reported an operating loss for the past three years.
Boulder Brands' ratios: P/E 131.7, P/B of 1.6 and P/S 1.43.
In addition to these new buys, Gabelli's largest new positions
include shares of Liberty Media spin-off Starz Inc. (
), Obagi Medical Products (OMPI), SeaCube Container Leasing Ltd.
) and Virgin Media Inc. (
See more of the Guru's buys and sells here, updated for the first
Also check out the Undervalued Stocks, Top Growth Companies and
High Yield stocks of Mario Gabelli.About GuruFocus: GuruFocus.com
tracks the stocks picks and portfolio holdings of the world's
best investors. This value investing site offers stock screeners
and valuation tools. And publishes daily articles tracking the
latest moves of the world's best investors. GuruFocus also
provides promising stock ideas in 3 monthly newsletters sent to