3 Potential Takeover Targets: Gabelli
Three companies look increasingly attractive for takeover bids, Gabelli Funds CEO and Chairman Mario Gabelli said Tuesday.
"Navistar is simple. It tracks its demand from Class A trucks, ties itself to GDP and they go through cycles," he said. "They made a mistake, and we did not figure out that they did not have a backup plan early enough."
Gabelli alluded to a Navistar engine that didn't work under U.S. Environmental Protection Agency regulations.
A "wildcard" was Fiat's Sergio Marchionne plans for its subsidiaries.
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"I think at some point once they figure out what to do with Chrysler that they may want to consolidate that, and if they don't, Navistar will still come in with $15 billion in revenues in a couple of years and $1 billion of EBITDA, and I think the stock with a market cap of $2½ billion is worth putting a few bets down," he said. "Now, short-term you've got some potholes."
Next on Gabelli's list of potential takeover targets to buy was Hilshire Brands.
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"This company sells at $32," he said. "I think you have a $45, $50 stock."
Gabelli said that the company could also see a turnaround within three to five years.
Lastly, he noted that Post Holdings had been around for a while.
"Cereal was around in 1890, so I don't have to guess about whether the next Netflix will be here," he said.
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"I also like to buy an individual that is a gifted CEO," Gabelli added, praising Bill Stiritz for his leadership at Ralston.
"I bet you he's going to put together a very interesting company over the next three or four years," he said, noting that Post had a market capitalization $1.47 billion, or small cap. "That's where you want to forage."
Trader disclosure: On July 9, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Simon Baker is long GS; Simon Baker is long BBRY; Simon Baker is long AMZN; Simon Baker is long GRPN; Simon Baker is long MTB; Simon Baker is long BKS; Simon Baker is long TSLA; Simon Baker is long MSG; Simon Baker is long DISH; Josh Brown is long AAPL; Josh Brown is long JPM; Steve Weiss is long BAC; Steve Weiss is long C; Steve Weiss is long M; Steve Weiss is long SODA; Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long CRUDE OIL FUTURES.