Why Did Billionaire Mario Gabelli's Company Sell MAKO Surgical?

Robotic surgeries hold a lot of promise.

Feb 13, 2014 at 4:30PM

The latest 13F season is commencing, when many money managers issue mandatory reports on their holdings. It can be worthwhile to pay attention to these documents, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider GAMCO Investors (NYSE:GBL), the diversified asset-manager and financial-services company headed by billionaire value investor Mario Gabelli. According to its recently released 13F statement, the company sold all of its shares of robotic surgery specialist MAKO Surgical, known for its RIO robotic orthopedic system. There's no mystery there, as Stryker (NYSE:SYK) bought the company for $30 per share, sending the stock up more than 80% on the news in September.

Those who were interested in MAKO might want to look at Stryker. It's not a robotic pure play, but as my Fool colleague Stephen Simpson recently noted, Stryker "had a surprisingly strong quarter in its reconstructive products business, and the long-term outlook for instruments, endoscopy, and neuro/spine are all appealing." It has been gaining market share in some of these markets and is testing total knee replacements with MAKO systems, with an eye to further expand the machines' potential. Stryker stock yields 1.5%, and its dividend has more than tripled over the past five years.

What it means
The MAKO acquisition bodes well for Intuitive Surgical (NASDAQ:ISRG), MAKO Surgical's far bigger peer, as it reflects a generous valuation and positive expectations for robotic surgery. It might bode even better for smaller robotic specialist Accuray (NASDAQ:ARAY), as some speculate that it, too, could get bought out.

Intuitive Surgical, once a highflying stock-market darling, has had a tougher time lately, in part due to questions about the safety and effectiveness of its robotic systems. Many believe the company will be vindicated, though; in the meantime, while domestic sales have pulled back as hospitals rein in spending, sales have been growing abroad. Intuitive Surgical is also looking to expand the uses of its machines, so that they can perform more operations.

Meanwhile, though CyberKnife system maker Accuray is small and still unprofitable, its losses have been shrinking while its backlog grows. The CyberKnife kills cancer cells with laser-driven radiation while leaving healthy cells alone. Accuray also offers the TomoTherapy 3-D CT imaging system.

GAMCO's latest 13F report didn't include Intuitive Surgical, Accuray, or Stryker in its list of holdings, but you might want to consider one or more of them for your portfolio, if you're bullish on the medical advances they're offering.

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Selena Maranjianwhom you can follow on Twitter, owns shares of Intuitive Surgical. The Motley Fool recommends Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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