“First of all the fundamentals are good,” Gabelli said on CNBC. “Peltz comes along and gives you a little extra tailwind. You’ve got a $40 billion market cap. A lot can be done there.”

Moreover, other large investors have also picked up on BNY. For instance, Warren Buffett held about 23 million shares of BNY as of the end of September.

Looking ahead, the investment banks will seet net interest margins rise. Gabelli believes that interest rates could go up faster than anticipated, which would benefit banks. Additionally, he argues that trust banks have a better outlook since they are more conservative and attentive to how they invest assets to generate higher returns.

PowerShares KBW Capital Markets Portfolio

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Max Chen contributed to this article.