Where Mario Gabelli Sees the Greatest Value Opportunities Today

During his recent interview with CNBC, Mario Gabelli discussed current opportunities in spin-offs, defense, and energy. “You look at Company A spins off a division. The ETFs that own company A can’t own company B. So if you focus on it and you figure out what the intrinsic value is, what is it worth? What is it worth in three years,” Gabelli explains. This strategy of identifying undervalued spin-offs is a cornerstone of his philosophy, allowing investors to capitalize on market inefficiencies.

Gabelli also emphasizes the importance of global opportunities, particularly in Japan, where he sees parallels to the conglomerates of the 1960s.

“You see what Buffett did with the big five of the Japanese trading companies? It reminded me of the conglomerates back in the 1960s,” he notes.

Gabelli’s firm opened an office in Tokyo over a decade ago, underscoring his commitment to uncovering value in international markets. His focus extends to Europe, where he highlights Iveco, a company with a defense business poised to benefit from increased NATO spending. “The defense business is where everyone is looking, because the amount of money that NATO is spending has risen dramatically,” he says.

In the U.S., Gabelli points to Textron as a standout opportunity. “Textron is important because there’s 180 million shares. Scott Donnelly, who runs it, has done a terrific job,” he states.

With earnings projected at over $6 per share and a backlog for its Cessna aircraft, Gabelli sees Textron as “an extraordinarily cheap stock.” His confidence in the company’s growth prospects, particularly in defense and aviation, reflects his knack for identifying undervalued assets with strong tailwinds.

Another compelling pick is National Fuel and Gas, a company with significant assets in the Marcellus shale region. “They own significant acreage for the last 100 plus years, 100 years in Pennsylvania,” Gabelli explains. With natural gas demand rising, particularly for exports and regional distribution, he sees the stock as a long-term play.

“They’re going to earn close to $7 this year,” he adds, highlighting its attractive valuation. Gabelli also notes the company’s potential for acquisitions, further bolstering its growth trajectory.

Whether it’s spin-offs, global conglomerates, or energy assets, Gabelli’s strategy revolves around identifying intrinsic value and waiting for the market to recognize it. As he puts it, “you sit back with a basket and you say thank you.”

You can watch the interview here: