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Super Mario Gabelli of Gamco Is King of M&A, as Hillshire Deal Shows

NEW YORK (TheStreet) -- It seems every other day another activist money manager is in the news. Whether it is Carl Icahn, Bill Ackman, Jeffrey Gundlach, Dan Loeb or others, someone is making waves on Wall Street.

Another prominent investor usually stays under the radar -- despite his numerous appearances on CNBC. That's Mario Gabelli, whose Gamco Investors manages some $47 billion in assets.

As Wall Street continues to see more and more mergers and acquisitions (M&A) activity -- especially larger deals -- Gabelli and his clients have quietly and significantly profited from several of these transactions. 

The bidding war between Tyson Foods (TSN) and Pilgrim's Pride (PPC) for Hillshire Brands (HSH) is just the latest in a string of prominent deals. Just today, Tyson agreed to buy Hillshire for $63 per share in cash, valuing the company at $8.55 billion. For the past several years -- back when the company was known as Sara Lee Corporation -- Gabelli has pounded the table over Hillshire and how heavily the market had discounted its shares. It seems as though he was right yet again. 

After starting his career as an analyst covering the automotive and media and broadcasting sectors, Gabelli started Gamco in 1977. He has been actively picking stocks within those sectors and the rest of the market ever since 

By analyzing cash flows, he focuses on a firm's private market value, or what the firm would be worth if it were to be taken private. After identifying public companies selling at discounts to their intrinsic valueGabelli also looks for catalysts --  regulatory change, industry consolidation, corporate actions like share repurchases, asset sales, spin-offs and management changes, etc. -- that would cause shares to move closer toward their PMV. 

That has paid off tremendously. Some of his other top picks were also involved in M&A deals earlier this year, most notably Beam (BEAM) and DirecTV (DTV). While the $48.5 billion merger between DirecTV and AT&T (T) has not yet been completed, the acquisition of Beam by Suntory (STBFY) for $16 billion was completed at the end of April.  

Moreover, Gabelli has been a long-time shareholder in many other companies including Cablevision (CVC), which has proven to be a worthy investment over the years. That's even more true of late with the success of spin-offs such as AMC Networks (AMCX) and Madison Square Garden (MSG). 

Considering Gabelli's long-term track record, his ability to identify undervalued companies is impressive to say the least. Super Mario, indeed.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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