Is having Icahn as a fellow shareholder all that bad? Mario Gabelli, GAMCO Investors, says no. “I like to follow individuals with a high slugging percentage. Carl is very good.” He also weighs in on cable stocks, and American bourbon companies.
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
welcome back. carl icahn has been known to shake up the executive suite. we’ve seen it with yahoo! and now his pursuit of dell. but for mario gabelli, having him as a fellow shareholder may not be such a bad thing. is that right? mario joins us now. you know, bill and maria, we like to follow individuals that are also very good at service and values and have a high slugging percentage, means they make good returns over a period of time. john is one. carl icahn and mark. carl icahn has been buying navistar and he owns about 16%, our clients own about 9.5%. and that stock’s around $33. class-a big trucks. and five years from now, four years from now, maria, they’ll earn about $6 and he’ll find a way to harvest that. you didn’t buy it because he did. no. we’ve been in it for a while. yeah. in it about 19 — you know, a long time. and another one is federal mogul where he owns 81%, and the stock is 14. next year, fdml, they’ll earn $2.40. so the stock’s going straight up over time. and they will split up the company, have aftermarket oe, so carl is very good. we’re back in the period of activist investor and carl is a prime example. bill ackman, everybody, is that a good thing? are they stirring up the right kind of dust? well, you go back to the ’60s when i first came down to this place, what you had was bootstrap financing, someone who would look at the sum of the parts, figure out how to break it out, and in quotes the corporate raiders. charlie bluedawn, gulf & western, jimmy lings of the world. so this dynamic of the free market changes overtime. and when you give money to individuals or organizations, 1 in 20, they’re absolute return oriented. they don’t want to beat the market. they’ll be active. you’re talking about what navistar will be able to earn, really looking at earnings. give us the most important screens you look at when you’re picking stocks. well, we like to look at how much we’ll lose first. the downside risk. — they only had one engine and certain way to meet epa requirements, didn’t have the backup we thought they did, and we blew that one. on the other side of the coin, how much can they earn on the upside of the cycle and what money can they — is there a risk, maria, having a financial challenge on the downside, and what carl icahn did with federal mogul is brilliant. he had a rights offering and basically raised $500 million, so eliminated the downside. after that was done, it’s moved from 9.50 to 14.50. so that’s all in about a month. right. so that’s one screen. what are your other screens that are most important when you pick stocks? we don’t believe in price like bill, kiss a frog and it’s a prince. wee a good manager. in the case of john malone with toledge, he backed him as well as the industry of which he’s a part. so the moon, the sun, the stars said when you have a good industry, good company, good management, and america’s very blessed with good ceos — you’ve long been an investor in media. you talk about john malone, viacom, you pound the table on that still, right? i look at companies with cash flow that are buying back stock, bill. when they split up and spun off cbs, they had 722 million shares outstanding, down to 470, and in three, four years, down to 350. so some of the redstone will be the last person standing, and we’ll be the second person behind him. viacom is selling at 72. probably worth in a mark-to-market model basis, three years out, over 100. are you — but there’ll be air pocket. are you surprised we haven’t seen more m&a, in an environment where you have rock-bottom levels? you also look at marriages and love like you call it in business. you’re going to make me blush. notwithstanding that, it’s financial engineering, spinoffs. spinoffs are an important part. maria, for example, roll corp. it was taken over by conagra. post is a cereal company that’s run by a gifted ceo by the name of bill, and he will make us a lot of money and already has. in addition to that, the old-fashioned company a buys company b to grow, and that we’ll see a lot more of in the next 12 months. rates are at such rock-bottom levels. are you surprised we haven’t seen more? i think the ingredients are there except one. confidence. the ability of the ceo to walk into his board and say, i’ve got visibility over the next three years, and that requires changes in the way government is approaching this antagonism towards business. i love watching you work. you haven’t looked at a note yet. you have all of the numbers off the top of your head. years ago, i remember we were sitting down with jim rogers and during a commercial, you leaned in to him, and you uttered one word. you said, coffee? yeah, he should have bought it. single-serve. you weren’t asking for a cup of coffee at that point. you saw that coming. now the word you’re saying is bourbon? well, american bourbon, spirits, alcohol, about a $600 billion business on a global. bourbon is only $8 billion. so to the degree you buy jim beam, brown foreman, and wild turkey, you have a strong tailwind of those companies and those consumers around the world that want to buy this product. consumer tastes are fickle. that can change on a dime. slowly. okay. you walk into a bar tonight with me and we can have a jack and coke and see what everybody else is drinking, and i’m not knocking anybody else’s product. i mean, you know wild turkey is your preference. notwithstanding that, there are a lot of other stocks that we like, like malone. why did he buy into cable, what does that mean for cablevision? chuck dolan has an opportunity, maria, to take cablevision at 18.50 a share and put that into time warner cable, cluster up new york, and then have malone with rutledge do something. it’s a lot of interesting dynamics — interesting characters. look, i know you’re a stock picker. mario, what do you think about the market? we’re still waiting on this great rotation, all of the money that came out of bonds — it’s happening, maria. we see it now. we see it now with individuals through their intermediaries, the investor/advisor is saying, listen, the bond is 2.60, going to 3, 3.25, and at some point, the t-bill — the 30-day goes up, so we’ve got to move you into equities, start off with a baby step like training wheels and utilities, and that’s how to run. but they’ll do other things over time. and not only that, why did warren buffett buy heinz? he bought it in part because he wants a cash-generating business that will be inflation indexed and he can maintain the multiple on his exit strategy down the road. there’s a lot of reasons to preserve capital by owning equities. at the same time, i can’t knock anything else anyone else does. yeah. let me hit you with one more. fracking. are you making a bet — are we going to see a revolution in this country where we become much more energy independent? well, our bill — our balance — bill, our bill — our balance of payments is about $300 billion. right. so as we try to not give as much of our wealth to the non-americans, countries that may not be friendly to us, like cline that and other parts of the world over time, fracking is a technology that’s been around. so can we become energy efficient? no. we have to hug the planet, be environmentally sensitive, but we a the bridge that god shave us to find the shale and deliver it to the right price. so natural gas. the other day, maria, the other day as part of financial engineering, one oak, a company, took the local distribution business, ldc, selling gas utility, and spun it off to the shale. other companies have taken their midstream business and monetized it. national fuel and gas sells at 62. the day they announced that, it’s 82. mean while, it’s a loaded laggard. rich in natural gas in this country, so you would expect there’s investment ideas around that. there are. plus equipment. there’s a company reporting this afternoon called weatherford. i was not down recently visiting with the management, you know, some time ago. there’s a company that jeff bought called luf kin. they lift the liquid and/or gas out of the ground through artificial lift, after the shale works on it. the stock is 13 1/2. wft is the symbol. 800 million shares, a good business and a bad business. we would like to see them sell the bad business. monetize some aspects of the good business. you have a stock that could be doubled. they have some issues, a lot of warts they bring to the table. but it’s worthwhile looking at, and today we’ll know — the stock has come back here ahead of the earnings as you saw there. well, what we’re looking for is a cleanup in t foreign corrupt practices act. they made blunders offshore. they’ve had accounting issue, some tax issue, but though have some fairly wonderful businesses. and just get an activist — not me, but an activist to focus on it and you can get a fairly significant lift in the stock, not artificial either. got it. the mind is always working, isn’t it? thank you mario. great to have you on — you guys are inspirational. get him started, he’s going to make — by the way, how come you don’t have a check mark on your twitter page either? what do we have to do to get a check mark — chase a checkmark? you should know what that is. i had somebody set it up and hit a button. thanks, mario. delighted to be here. 20 minutes left in the