Every year Barron’s gathers a group of asset management luminaries for a roundtable discussion. The group collectively manages many many billions of dollars and includes people like Jeffrey Gundlach, Mario Gabelli and Meryl Witmer. While the discourse includes a bit about the overall macro environment, the focus is mainly on each individual’s top investments for the coming year. Personally, I bet they also throw back a few drinks to really make it a good day, but that doesn’t seem to be in the transcript.
As noted above, one of the participants is Mario Gabelli, the CEO and Chairman of GAMCO Investors (GBL), and he always seems to include a spinoff or two in his picks. That shouldn’t be a surprise though, considering his own firm executed a spin off of its own, alternative investment group Associated Capital (AC), back in 2016. This year was no different and here are the details on his recent spinoff picks for 2017:
- Herc Holdings (HRI) – the company provides rental equipment and Mr. Gabelli believes thinks the company could benefit from a Trump Administration focused on investing in large infrastructure projects. The company was spun off from Hertz Global (HTZ) back in 2016 after pressure from Carl Icahn, although the transaction was delayed a bit by accounting problems at the parent company.
- Liberty Braves (BATRK) – Mr. Gabelli has long been a fan of John Malone for his tremendous track record and sensitivity towards taxes. Liberty Braves was spun out of Liberty Media and is a tracking stock for the ownership of the Atlanta Braves. He recommends it because ‘you can buy a baseball team at a discount’ and also get a real estate business with ~80 acres in Georgia.
Gabelli also recommended Viacom (VIAB) which was spun out of CBS (CBS) in 2005, but that doesn’t really qualify as ‘recent’. He has picked CBS in the past, a company that just announced the spin of its radio business via reverse morris trust yesterday.
Interestingly, John Malone also received love from another member of the group during the Roundtable discussion. Oscar Schafer, Chairman of Rivulet Capital, recommended Liberty Global (LBTYK). Although shares have come down a bit recently, Mr. Schafer believes the stock is undervalued and views European cable as an ‘attractive business’. We don’t hear that a lot here in the US, but apparently cord cutting risk is minimal overseas due to competitive pricing. Additionally, the company has taken serious efforts to rejuvenate its growth engine and could also pursue acquisitions on that front. Mr. Schafer values the shares at $55 by the end of the year, representing quite a bit of upside.
Barron’s provides an update to their Roundtable in June so we can all judge them track their progress mid-year.
Disclosure: Author is long shares of BATRK
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