We have discussed at length the investment philosophies and stock picks of billionaire Mario Gabelli and Mason Hawkins in our previous articles. While a lot is common among these legendary investors, one of the biggest shared factors between the two is their adherence to fundamental value investing philosophy. And while the AI-fueled rally is causing growth stocks to remain in focus and value stocks to languish on the backburner, something interesting is happening that could be a sign of wider rotation of the financial markets towards value.
In this environment it would be interesting to see which stocks were common in Mario Gabelli and Mason Hawkins' portfolios heading into 2024. For this article we scanned the Q4 portfolios of Gamco Investors — the hedge fund of billionaire Mario Gabelli — and the Q4 portfolio of Southeastern Asset Management — the fund led by Mason Hawkins — and picked 14 stocks in which both these funds had stakes as of the end of the fourth quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Arkansas-based roasted coffee company Westrock Coffee Co (NASDAQ:WEST) is one of the top stocks found in the portfolios of both Mario Gabelli and Mason Hawkins.
In November, Westrock Coffee Co (NASDAQ:WEST) said its adjusted EBITDA outlook for 2023 was expected to fall below its previously issued guidance range of flat to 10% over 2022.
Longleaf Partners Small-Cap Fund made the following comment about Westrock Coffee Company (NASDAQ:WEST) in its Q3 2023 investor letter:
“Westrock Coffee Company (NASDAQ:WEST) – Westrock Coffee, which is the “brand behind the brand” producing and distributing coffee, tea and extracts for larger entities, was another top detractor in the quarter. Westrock faced a challenging summer with inflation, heat waves making hot coffee less popular and high gas prices negatively impacting traffic at convenience stores and rest stops. However, our long-term case for the business is less dependent on the single serve coffee business and more predicated on the potentially transformative plant that will be operating in 2024 and will support a shift to higher value beverages that represent a tremendous growth opportunity. In the near-term, Westrock did a capital raise to accelerate the growth of the new plant, and this also weighed on the stock price in the short term.”
Number of Hedge Fund Investors: 17
Mario Gabelli's Stake: $12,475,370
Mason Hawkins' Stake: $60,814,554
Graham Holdings Co (NYSE:GHC) is a conglomerate having multiple business segments including educational services, hospice care, car dealerships and media. Mario Gabelli's hedge fund had a $12.5 million stake in Graham Holdings Co (NYSE:GHC) as of the end of the fourth quarter, while Mason Hawkins' Southeastern had a $60 million stake in Graham Holdings Co (NYSE:GHC).
Over the past one year the stock has gained about 9% A total of 17 hedge funds out of the 933 fund in Insider Monkey had stakes in Graham Holdings Co (NYSE:GHC).
Number of Hedge Fund Investors: 23
Mario Gabelli's Stake: $4,023,700
Mason Hawkins' Stake: $166,764,660
Natural gas company CNX Resources Corp (NYSE:CNX) is the biggest holding of Mason Hawkins' Southeastern as of the end of the fourth quarter, while Gabelli's hedge fund had a $4 million stake in CNX Resources Corp (NYSE:CNX).
Longleaf Partners Small-Cap Fund made the following comment about CNX Resources Corporation (NYSE:CNX) in its Q3 2023 investor letter:
“CNX Resources Corporation (NYSE:CNX) – Natural gas company CNX Resources was the top performer in the quarter. The company benefited from rising energy prices, as well as strong operational execution. CNX remains highly discounted, as the market does not give the company credit for its longer-term undrilled assets or its “new technology investments,” which include methods to reduce carbon on a net basis. Management expects this to be a material business for CNX over the longer term, but for now it is a high-quality hidden asset. CNX has taken advantage of the price disconnect through meaningful share repurchase.”
Number of Hedge Fund Investors: 29
Mario Gabelli's Stake: $103,629,206
Mason Hawkins' Stake: $51,034,139
Agricultural and construction equipment company CNH Industrial NV (NYSE:CNHI) is one of the stocks loved by both Mario Gabelli and Mason Hawkins. The fourth quarter portfolio of Mario Gabelli's fund shows that it had a $103 million stake in CNH Industrial NV (NYSE:CNHI). On the other hand, Mason Hawkins' hedge fund had a $51 million stake in CNH Industrial NV (NYSE:CNHI).
CNH Industrial NV (NYSE:CNHI) stock is up about 1.8% over the past 30 days as of February 22.
Oakmark Global Select Fund made the following comment about CNH Industrial N.V. (NYSE:CNHI) in its Q3 2023 investor letter:
“CNH Industrial N.V. (NYSE:CNHI) (Italy), which designs, manufactures, and distributes agricultural and construction equipment, was the top detractor for the quarter. CNH Industrial’s share price fell following its second-quarter results, as agriculture equipment sales rose 5% in local currency, a slowdown from the prior quarter. This performance fell below market expectations due to destocking activity in Brazil and some production ramp-up issues for its new Patriot sprayer. We believe the production issues are temporary while the destocking actions will better position the business for the midterm. Pricing power remains quite strong and increased by roughly 7%, and precision agricultural sales grew by 21%. While the market was overly focused on near-term demand and sales growth, the agriculture equipment division produced its highest quarterly margin ever at 16.8%—an encouraging development that supports our view of the company’s long-term profitability. Further, the much smaller construction business delivered strong results, including its own quarterly margin record. Management maintained guidance for the rest of the company’s current fiscal year and indicated it expects to exceed the 2024 targets laid out at a capital markets day in 2022. We recently met with CEO Scott Wine at the company’s offices. He expressed confidence in the company’s ability to drive much better through-cycle financial performance while avoiding the company’s previous mistakes. He also believes the company’s share price is materially undervalued, and although he would prefer to invest in the business, he sees an opportunity to increase returns to shareholders via share repurchases. We believe CNH Industrial remains a solid business in an attractive industry that is run by a much-improved management team.”
Number of Hedge Fund Investors: 32
Mario Gabelli's Stake: $806,176
Mason Hawkins' Stake: $166,906,960
Mattel Inc (NASDAQ:MAT) stock jumped earlier this month after Mattel Inc (NASDAQ:MAT) gave a strong guidance for this year. Mattel Inc (NASDAQ:MAT) said its adjusted gross margin is expected to come between 48.5% and 49% compared to the average analyst estimate of 47.9%. Adjusted EBITDA is expected in the range of $975 million to $1.03 billion compared to the estimate $987.3 million. Mattel Inc (NASDAQ:MAT) sees adjusted EPS in the range of $1.35 to $1.45 compared to the expectation of $1.37.
Number of Hedge Fund Investors: 35
Mario Gabelli's Stake: $7,415,511
Mason Hawkins' Stake: $123,642,393
Kellogg Co (NYSE:K), which renamed itself last year to Kellanova Co (NYSE:K) following a split, is one of the favorite stocks of Mario Gabelli and Mason Hawkins.
Earlier this month, BofA published its list of "Magnificent 80" stocks that it believes can offer more in dividend yields than cash. Kellogg Co Co (NYSE:K) made it to the list. The stock has a dividend yield of 3.97% as of February 22.
Number of Hedge Fund Investors: 44
Mario Gabelli's Stake: $1,157,703
Mason Hawkins' Stake: $118,390,585
Media and internet brands company IAC Inc (NASDAQ:IAC) is loved by both Mario Gabelli ($1.1 million stake) and Mason Hawkins ($118 million stake).
Earlier this month IAC Inc (NASDAQ:IAC) posted fourth quarter results. EPS in the fourth quarter came in at $3.70. Revenue fell 15.2% year over year to $1.06 billion, missing estimates by $10 million.
TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about IAC Inc. (NASDAQ:IAC) in its Q3 2023 investor letter:
“For the Communications Services sector, we generally prefer to invest in media and services companies that are either well placed from an advertising perspective with a target audience or provide differentiated services. IAC Inc. (NASDAQ:IAC) is engaged in the media and Internet business. Its two core business segments are Dotdash Meredith and ANGI Homeservices. Dotdash Meredith provides digital and print publishing services. ANGI Homeservices offers a gateway to repair, remodeling, cleaning, and other services. While Dotdash Meredith results were in line, ANGI fell short of expectations as they are shifting their focus to high-quality customers to generate more profitability. Shares of IAC fell -20% on this report and we added to the position on weakness.”
Number of Hedge Fund Investors: 45
Mario Gabelli's Stake: $23,854,520
Mason Hawkins' Stake: $111,144,762
Resorts and casino giant MGM Resorts International (NYSE:MGM) is one of the stocks loved by both Mario Gabelli and Mason Hawkins. MGM Resorts International (NYSE:MGM) recently reported fourth quarter results. MGM Resorts International (NYSE:MGM) earned $1.06 per share, beating the Wall Street estimates of $0.35. Revenue jumped 22% on a year-over-year basis to $4.38 billion, surpassing estimates by $240 million.
Insider Monkey's database of 933 hedge funds shows that 45 hedge funds had stakes in MGM Resorts International (NYSE:MGM) as of the end of the last quarter of 2023.
Longleaf Partners Fund stated the following regarding MGM Resorts International (NYSE:MGM) in its fourth quarter 2023 investor letter:
“MGM Resorts International (NYSE:MGM) & Hyatt – Hospitality companies MGM Resorts and Hyatt were both strong performers in the fourth quarter and for the year, outperforming expectations that the post-COVID travel rebound would ease in 2023. Casino and online gaming company MGM saw double-digit revenue growth and strong 2023 bookings in Las Vegas in the first half, which moderated in the second half but remained solid. A cybersecurity attack negatively impacted 3Q results, but MGM does not expect the $100 million hit to have a material effect on its financial condition and operational results for the year. MGM bought back discounted shares at a 15% annualized rate and authorized another $2 billion buyback in 4Q, which represents another 15% of the company.”
Number of Hedge Fund Investors: 45
Mario Gabelli's Stake: $24,476,447
Mason Hawkins' Stake: $115,526,362
Last month, Roth MKM upgraded Live Nation Entertainment Inc (NYSE:LYV) shares to Buy from Neutral and raised the stock's price target to $114 from $92. Roth MKM cited an increased demand for live events and concerns in the US for its bullish outlook on the stock.
Out of the 933 funds tracked by Insider Monkey, 45 hedge funds had stakes in Live Nation Entertainment Inc (NYSE:LYV). The biggest hedge fund stakeholder of Live Nation Entertainment Inc (NYSE:LYV) during this period was Robert Joseph Caruso's Select Equity Group which owns a $979 million stake in Live Nation Entertainment Inc (NYSE:LYV).
Longleaf Partners Fund stated the following regarding Live Nation Entertainment, Inc. (NYSE:LYV) in its fourth quarter 2023 investor letter:
“Live Nation Entertainment, Inc. (NYSE:LYV) – Live Nation Entertainment, a new purchase this year, was a strong performer in the fourth quarter and a strong performer for the year as it outperformed expectations. Live Nation reported a great 3Q, with revenues and adjusted operating income up 30%+, concert revenues up 29% and ticketing up 55%. The company guided for continued strong growth in 2024. We have prior knowledge of Live Nation from our time owning various Liberty Media entities and are encouraged on future capital allocation that Liberty is still on the case as a 30%+ owner.”
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Disclosure. None. Mario Gabelli Mason Hawkins Love These 14 Stocks was initially published on Insider Monkey.
