With the second half of the year underway, it's prudent to take stock on how your portfolio performed in the first six months of 2014.
One billionaire has decided to make the latter much easier for investors. Mario Gabelli, the renowned value manager and founder of the GAMCO family of funds, took to CNBC last month and shared some of his views on equity markets.
With no shortage of commentary these days on financial news networks, why should you listen to Gabelli?
For starters, Gabelli has been investing for nearly six decades now. He has come a long way since buying his first stock at the age of 13. Now at the age of 72, his firm, GAMCO Investors, currently manages some $48 billion in assets, with Gabelli amassing a personal fortune of $1.8 billion along the way.
As such, his experience should cause some ears to perk up when he dishes free institutional research. Fortunately for us, Gabelli mentioned three of his top picks for the latter half of this year. Here's a deeper look at his recommendations.
|Interpublic Group of Companies (NYSE: IPG)|
Interpublic Group of Companies was singled out during the interview, with Gabelli's comments largely positive of IPG CEO Michael Roth. Claiming Roth has "done a terrific job," Gabelli is bullish on the global advertising and marketing company. With a market cap of $8.3 billion, IPG employs over 46,000 people in every major global market, and it continues to acquire other agencies as the industry consolidates.
Jefferies analyst John Janedis has high hopes for IPG as well, upgrading the company to a "buy" at the end of June. His price target of $23 represents 18% upside from current levels. Billionaire Steve Cohen of SAC Capital joins Gabelli in his investment of IPG, with a $24.4 million stake, according to SAC's first quarter 13F filing.
|International Game Technology (NYSE: IGT)|
International Game Technology also received a positive mention from Gabelli, though the reasoning behind his investment seems to be more speculative. Gabelli's contention is that IGT is "not as well run" but has good cash flow and may be ripe to be bought or restructured. The manufacturer of casino-style gaming equipment has already "hired a banker to look at alternatives," further supporting that thesis.
Speculation is IGT's final fate will be, as the company is in the process of exploring strategic alternatives. Other notable investors in IGT include billionaire Ken Griffin of Citadel Advisors, whose investment is valued at a staggering $111.5 million.
|International Flavors & Fragrances (NYSE: IFF)|
International Flavors & Fragrances has been in GAMCO's portfolio for quite some time. Similar to his other two picks, Gabelli's comments were centered on corporate governance, mentioning that IFF is currently going through a "management change." IFF, which creates flavors and fragrances used in multiple consumer products (think food, beverage, and household applications), stands out to the fund owner particularly due to the salt and sugar substitutes it is working on.
Gabelli is joined by British hedge fund manager David Harding as an owner of IFF stock, with a $34 million position.
Risks to Consider: GAMCO manages what could be considered an obscene amount of money by anyone's standards, and metrics like scalability and time horizons take on different meanings at those levels. With the firm's power to diversify and hedge across any number of other assets, consider the differences in your personal risk profile before mirroring even the best manager's picks.
Action to Take --> Through decades of profitable analysis and investing, Mario Gabelli has amassed a net worth nearing $2 billion. His willingness to share his insight is refreshing in the often secretive world of institutional money management, but it's still necessary to complement his analysis with your own. IFF and IPG seem primed to create long-term value, with IGT looking like more of a near-term speculative play.