An interview with billionaire investor and founder of GAMCO Investors, Mario J. Gabelli. In this interview, Mario explains how he thinks about investing and explains what his favourite investments are and why.
Billionaire Mario J. Gabelli : Stock Picks And Thought Process With Investments
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
I my call. And welcome back to real conversations with Mario J. Gabelli . You know we're talking over time what his best ideas best stock picks buying the dam dip today might make some gains we actually have a dip today.
You know know that you're a buyer you've been a debt buyer you're you're you're into that right now.
Well what we do is not complicated what's a company worth in three or four years. OK we have a high passion for companies but we also have a high retention rate so our turnover is very low. So if we think a company is going to be trading at 24 dollars today because it's worth thirty five in three years and I could buy it at 22 I have lower risk and a higher margin of safety. So we look for those slots you know and in addition to that while it's been low volatility key super low but individual companies had high value to them. Okay so today HarrisCorp. is up ten dollars. Wind was down 25 bucks in the last two days. So we look for those spots. And in addition to that when you're running 40 billion in equities and I run a portion of that you always have some extra cash that you want to buy stuff.
So you're you're agnostic on what the quote unquote market multiple is. I definitely am by the way. And just getting that on the shelf I mean you're just looking for companies that you can buy at the right price for three years or whatever time period.
The reason we want to have an extended time period is why do we want to pay taxes. Tax free accounts get the same thought process. The tax rate is twenty three point eight percent if you live in Florida and not in Connecticut or anywhere else so if you hold it over a year. So that's important to us because not only what you make it's what you keep in addition to that it takes a while for some of these companies where you may have a new management or a new CEO or new strategy for that to work out doesn't happen instantly like Flannery and or some of these companies.
So I'll ask you about that a little later on like new management teams do you like stuff of that nature themes. But first just giving you open rein here on what some of your top ideas are. Well
there are nothing new. They're a continuation of a policy or philosophy for example housing. Okay we'll do that one point three million single family homes would be an average for the last 30 years. Obviously when Wall Street was rating these low doc no doc and all those other things you basically got up to 1 6 1 7. Right now they're running at 900000 million homes. So I think there's a long runway here because populations increased. And as a result of that that whole ecosystem who benefits from housey which part in the initial phase and what happens later and how does manufacturing housing fit into that. So that's an example another example would be simple thing. I think tonight today is Tuesday the president will be talking at 9 o'clock. You got the infrastructure plate right. OK. You just drive at any. There's five hundred thousand bridges in the United States the American Society of Civil Engineers is rated the upgrade of them to a deep plus. And so what does that mean. It means that we need a lot of help. OK. And roads inland waterways avionics the whole no notion of how do we participate now we get an early sampling of that. We've got an early sampling in December of 2015 with the had to fix America's surface transportation called the fastback which helped give money to companies to go in and do the milling in the paving of roads and therefore we found companies like in Chattanooga a company called ashed tech. They make great equipment that you'll see from laying down asphalt and cutting up the roads and then we found one in Orlando Florida that had more cash than debt called Gencor. Now we've added to that even John Deere just bought a company called GRK and it closed out in December for about five point three. The largest acquisition. Does the building the Pavy and so on and are working and as a result of that that echoes.