Mario Gabelli of GAMCO Investors breaks down the current markets and where opportunities exist. In this interview with CNBC, Mario Gabelli discusses which stocks he is finding the most value in. Gabelli first discusses broad market valuation and then specific names.
The video along with a computer transcript can be found below:
i want to break down this market right no with our special guest. mario gabelli heads gamco investors. always a privilege and fun to talk stocks on the floor of the new york. exactly. i know you’re not looking at the macro stock market, you’re a stock picker, but you’re finding value in some of the deal flow we’re seeing. explain that. when you see a transaction like heinz, where warren buffett and an lbo comes along and buys a company, it lifts the other companies like general mills,because they’re starting to say, hey, what’s warren looking at? he’s looking at cash flow, so that’s an important element. and when ge bought lufkin, it lifted the ship of related companies because of his, their commitment to go into shale and fracking. and so companies like weatherford, which we like, are an example of that. do you think we’ll see more deal flow in that space, whereweatherford is? where do you expect the most deal flow to lift these boats? you’ll have a lot in the health care area. it’s not an area which we have a very deep, strong core competency, maria, but we have individuals like jeff jonas and ken kendra working that area and we’re finding good ideas there. but the economy, the clear path is housing, it’s energy, and in addition to that, it’s vendors to the boeing and airbus. if you’re looking at a way to play india and china with a rising middle class and high propensity to travel, a high 1.5% to travel in boeing, andbenders to boeing we like, like curtis wright. ively gi you more names. you know, mario, thet time we were together, you werevery excited about energy and you’ve added now this extra fill-up of the possible deal flow that could come into this area. is it really mostly the fracking that has you so juiced about energy?and what other companies besides weatherford and the other one that yed do you have your eye on? we like to look at naturalfuel and gas, natural fuel is about a $60 stock. and it has 80 million shares. it’s a $5 billion company located in o, new york.utility, midstream pipeline, which hopefully they convert to an mlp, tyler. anddition to they own that acreage in marcellus.that’s a very prolific fine. it’s good for the united states and our balance of payments, good for our deficit, and good for creating jobs in the united states. so we like national fuel and we like weatherford as a play on a — once day get past this foreign practices dynamic and some other minor issues, notnecessarily minor, the company could be 50% to 100% up in the next 12 months to 18 months, after they get past the fcpl. i would like to get your thoughts on the broader market, and put it this way, who’s going to state hotter longer, your beloved new york knicks o equities? that’s a great yes. they’ve positioned themselves. but msg was a spin-off, part of financial engineering, a deal that maria started me, and financial engineering, they split up cablevision and amcx. last time i was down on the floor, i talked about the walking dead, and somebody smirked, but the stock is up 50%. amcx is 54, madison square garden is 58, maria. so, it’s a double dribble.but when you look at the broader market, you have to have a strong market in order for a lot of these ideas to work. i want to get your opinion on what sam zell said yesterday. listen to this, mario, because he compared the market right now for stocks to the housing market back in 2006. listen to what he said. every single day it goes up. every day in 2006, the housing market went up. what was the number one headline every day?housing prices going up. what are you talking about every day now? new high on the stock market every day. i just think that we are suffering through another irrational exuberance. yeah, look, sam is right. and yet he’s as the dynamic went from being materially undervalued. and after the bernanke came out of jackson hole, they put more money into the system. he’s joined by mario draghi and now corona in japan. so that liquidity was designed to reflate housing and reflate financial assets. and so an area like the stock market that we want to participate and not through mileless investing. companying like t. rowe price,cheap stock. leg mason, the stop is going through a rewrite with the ceo sullivan coming on board. maria, the stock is $32.right. a $1 billion nol. i want to participate that way. how do valuations look to you? you can’t really say that the valuations today are like they were in the dot-com boom. because they were off the charts there. you’re talking about 14, 15 times earnings — maria, you’re dealing with a broad brush. i want to go down and look at cable stocks, like chatter is up sharply since rut ledge took it over. time warner cable is up sharplysince it was spunoff, and cablevision is down. cablevion, one they get past this first quarter, is going to start looking 12 months out,