Mario Gabelli says the animal spirits in the markets, awakened by tax reform and strong corporate profits, are creating a new wave of merger activity and opportunities for investors.
The CEO of Gabelli Asset Management said Monday on CNBC's "Halftime Report" that there will be a surge of merger activity as companies look to put their excess cash to work.
Already on Monday, CNBC has reported a possible deal where Dell Technologies would do a reverse merger with VMware, the cloud computing company. Keurig Green Mountain also announced plans to purchase Dr Pepper Snapple, and Sanofi said it would buy Ablynx.
Gabelli says he's a buyer of General Electric shares after their recent pullback, based on its industrial business. GE shares are up 1.5 percent on Monday. He said his firm is just starting to buy.
Live entertainment is an opportunity for investors, Gabelli said, saying he likes Liberty Braves (which is Liberty Media Corp. Series C), and Madison Square Garden.
He owns shares of casino operators Wynn and MGM and says he would continue to hold Wynn even without its CEO, Steve Wynn, at the helm. Wynn shares are plunging, down another 8.7 percent on Monday, after the chief executive was accused of sexual misconduct over a number of years. MGM's stock is up 2.2 percent.
Gabelli also said oil services companies are well-positioned, saying he is adding to his holdings of Halliburton and buying shares of a smaller Minneapolis-area fracking company called Twin Disc, sending its shares up 14 percent in midday trading Monday.
New priorities in Washington around infrastructure and defense spending, coming on top of tax reform, could continue to propel the markets higher.
Gabelli said, "I'm still very optimistic as I generally am over the next six to nine months." He says he doesn't believe the market is overheated at the moment.
"It's not like 1999 when doctors were looking at the quote machines while they were operating," Gabelli said. "You're seeing a flow of funds. Is it too much? Not yet."