Mario Joseph Gabelli (Mario Joseph Gabelli) was born 19 June 1942 of the year. He spent his childhood and youth in the Bronx, where he attended primary school first, and then the private Jesuit school for boys at Fordham University. In his spare time Mario, hitchhiking, traveled to the northern suburbs of New York, to Westchester County, where he worked as a caddy (a carrier of golf clubs and other equipment) in leading golf clubs, such as Winged Foot and Sunningdale. There he met many people, have achieved success in life, and these people often talked about investing in stocks. Later Gabelli told, that already in those days I read market reports for my own pleasure, and bought my first shares, when he was all 13 years.
Upon graduation, Gabelli received a scholarship and went to college at Fordham University. There he stood out not only with his hair, which at that time was still red, but also desperate enterprise. He always had another get-rich-quick scheme ready., like selling electric flashlights from the trunk of your own car during the period, when the streets and shop windows were poorly lit.
Graduating from college with honors and becoming a bachelor, Gabelli continued his studies as a graduate student in the Columbia University School of Business, where in the mid-1960s. seriously got carried away with the ideas of investing in value stocks. This is not surprising., if consider, that Gabelli studied with Roger Murray (Roger murray), a well-known promoter of the method of value investing and co-author of the fifth edition of Securities Analysis - the investment Bible, created by Benjamin Graham (Benjamin Graham) and David Dodd (David Dodd) in 1934 year. It is worth noting, that among Gabelli's classmates, who also lived in the Bronx and took turns giving each other a ride in cars, were Leon Kuperman (Leon Cooperman), who currently heads the Omega Advisors hedge fund, and Art Samberg (Art Samberg), President of Pequot Capital Management.
With an MBA (магистр делового администрирования), Gabelli c 1967 year started his investment career, working as an analyst at Loeb Rhodes, which provided brokerage and investment banking services. He was responsible for analyzing stocks in such industries., like automotive and agricultural equipment manufacturing, and later the media, теле- and broadcasting. Gabelli's predecessor at Loeb Rhodes was Michael Steinhardt (Michael Steinhardt), later successful hedge fund manager. In his typical flaunting manner, Mario joked, that "replaced Steinhardt's thin research files with his thick ones". IN 1975 year Gabelli went to work in a small analytical company William D. Witter, which after a while merged with Drexel Burnham.
Analyzing stocks, Gabelli put into practice the theory of value investing, which he was taught at Columbia University. He valued companies not for profit., and on the cash flow, analyzing them in great detail, in order to calculate the value, his own market value (private market value, PMV). This term means the price, which a potential buyer will be willing to pay for the company in the event of a takeover. The method of assessing the own market value of companies became widespread in the 1980s.. with the increasing popularity of leveraged buyouts, so called LBO. The calculations used were often different from the standard methods of measuring the value of public companies..
Gabelli's idea was based on the main principle of the theory of Graham and Dodd, search for shares, trading below their intrinsic value (intrinsic value), ie. cost, calculated based on the financial condition of the company. Gabelli also borrowed from billionaire investor Warren Buffett (Warren Buffett) the idea of adding a premium when evaluating shares within a more or less large block of shares. The author of the idea summarized his own contribution in his characteristic catchphrase slogan: “Graham + Додд + Buffett = Gabelli ”. He also sees himself as the inventor of the term “catalyst” for value investing.. Gabelli even patented a method he created under the name "Gabelli Private Market Value with a Catalyst Methodology" (Gabelli's methodology – calculation of own market value, taking into account the action of catalysts).
IN 1976 year Gabelli opened his first own firm called Gabelli & Company, Inc. The firm provided broker-dealer services, using as borrowed funds, so is the money, which Gabelli has accumulated, trading from your own account. The following year, a client asset management company was established, named Gabelli Investors, Inc. (later it was renamed to GAMCO Investors). TO 1981 year under the management of GAMCO was 81 check, and the total amount of funds in accounts reached about $33 million. Despite the instability of the economic situation in the United States and the stagnation of the stock market in the late 1970s - early 1980s., Gabelli's company brought income to its customers every year. By the mid-1980s. client assets, ruled by Gabelli, accounted for more $350 million, and the annual rate of return, рассчитанная по формуле сложных процентов, reached more 35%.
If many investors sought to invest in the growth of the company at the beginning of its life, then Gabelli, against, preferred to profit from the moment she left the stage. His favorite approach was, to invest or recommend investments in a company, which were acquired or privatized. Gabelli's company independently carried out all the analytical work, usually, trying to find firms, capable of becoming objects of LBO transactions (company buyout using borrowed funds). These firms can be characterized by a large amount of cash., underlying assets, such as real estate, or a large block of shares, founder-owned, having no children. Gabelli also searched for promising companies in industries with high cash flow and a low likelihood of new strong competitors..
Having once discovered such a company, he was ready to wait for years, until its shares rose in value. So, he started investing in Cowles Communications, Inc. in 1977 year, when the price of its shares was $14, and eventually became its largest shareholder. IN 1984 year, when this company (now called Cowles Media Co.) was privatized, its share price was $46, which brought Gabelli's clients a total profit of $33 million.
Another hugely successful investment was the Chris Craft shipbuilding company., which through its division BHC Communications, Inc. conducted operations in the field of television broadcasting. In the 1980s. BHC Communications becomes one of the leading independent television station operators in the United States, and its pre-tax profit almost sixfold over the six-year period. IN 2001 BHC was bought by media giant News Corp. (NWS). Gabelli's successful deals also include an investment in LIN Broadcasting., sold by McCaw Cellular Communications to 1990 year.
Not knowing tired Gabelli annually visited about fifty companies in order to collect information, met with the heads of more than a hundred companies, discussed investment ideas with other portfolio managers and read the order 20 specialized magazines, two or three newspapers and a huge number of industry reviews and corporate reports. He also wrote policy briefs for professional investor clients., who used his services as a broker, asset manager, etc.. IN 1986 year he told Jerry Edgerton in an interview (Jerry Edgerton) from Money magazine, that "reads annual reports instead of novels". Managing a narrowly focused portfolio, involving large investments in a small number of companies, Gabelli was able to influence the decisions of the management of the companies.
В период между 1978 And 1985 yy. portfolios, ruled by Gabelli, outperformed the Standard Index in terms of profitability each year & Poor’s 500, moreover, during five of these years, their results exceeded the results of the index by more than, than twice. With 1977 on 1988 yy. average annual growth rate of assets of GAMCO Investors, рассчитанные по формуле сложных процентов, Amounted 28%. Only a very small number of asset managers have achieved more in the same period. GAMCO Investors never ended the year with losses and only after two years failed to achieve the goal set by Gabelli - 10% profitability after taxes and adjusted for inflation. IN 1986 GAMCO Investors' assets in stocks combined with cash, invested pension funds, reached $1,6 billion.
In March 1986 of the year, nine years after founding an asset management firm, Gabelli presented his first mutual fund, dubbed Gabelli Asset Fund. He was inspired to create a mutual fund by one of his idols - the famous Peter Lynch. (Peter Lynch), Fidelity Magellan Fund Manager (By the way, like Gabelli, Lynch got interested in the markets, moonlighting as a caddy on golf courses). Gabelli Asset Fund was a no-load fund, that is, its shares were sold without brokerage commission. The minimum initial investment in the fund was set at $25000. Later, the amount was significantly reduced and currently stands at $1000, and for individual retirement accounts, there is no minimum at all. Gabelli Asset Fund was later followed by Gabelli Equity Trust – closed-end fund, which at that time was the largest fund, whose shares were traded on the New York Stock Exchange. By the end 1988 year, Gabelli's company included three mutual funds with total assets of $650 million, and two of them he managed personally.
The timing of entering the mutual fund industry has proven to be absolutely accurate.. Gabelli not only took off on the wave of the bull market, but also managed to take advantage of the sharp increase in the activity of financial media. Realizing pretty quickly, that his peculiar and charismatic nature seemed to be created for participation in television programs, he began to actively advertise himself, thereby increasing the popularity of their funds.
Based on the results of 1997 Equity funds of Gabelli Asset Management Inc., the number of which has already reached ten, demonstrated average profitability at the level 31,7%, which was the best result among the US mutual fund families. Morningstar Names Gabelli American Equity Fund Manager of the Year. TO 1998 year under the management of his company were assets in the amount of $16,3 billion. In February 1999 of the year GAMCO became a public company, placing on the market 6 million. shares at a price $17,50 per share.
Several years later, Gabelli was accused of, that his game was not very clean. Grabbing a stranglehold on the stock of his company, he came into conflict with his first investors Frederic Mancheski (Frederick Mancheski) and David Perlmatter (David Perlmutter), which are still in 1977 year invested in his company $75000. IN 2003 year they sued, claiming, that the value of their investment has risen to $100 million, and accusing Gabelli of, that during the IPO, they did not receive the shares due to them. Another part of the charges related to the "looting of assets" of the GGCP. Investors indicated, that Gabelli charged himself an unreasonably high salary in the amount of 20% from the holding's profit before taxes - in addition to the huge fee for managing GAMCO. As part of the settlement of the claim, Gabelli was forced to 2006 to pay their investors about $100 million.
This was not the only lawsuit, who raised the issue of Gabelli's adherence to business ethics. Around the same period, Gabelli faced litigation by the Justice Department and the FCC. The latter accused him of fraudulently manipulating auctions to issue licenses for the provision of cellular services to small businesses.
Gabelli claims, that not only money is the incentive for his stormy activities. According to him, when he started, this money was a very strong incentive, but when he became the one, чем является ныне, the situation has changed. Now the real motive for him is the ability to give money.. Leon Cooperman, Gabelli's buddy from Columbia University, He speaks, what mario – the most generous person, what have you ever known. Charitable purposes, to which Gabelli, according to Kuperman, spends millions, very diverse, but his main passion is education. Of course, it does not do without his usual bravado: many of the donations are named after the donor. Among them, the Gabelli School of Business (Gabelli School of Business) at Roger Williams University in Rhode Island and Gabelli Hall (Gabelli Hall) at Boston College.
Gabelli managed to win the trust of a number of leaders of the largest companies in the world. IN 2001 year head of Microsoft (MSFT) and the richest man on the planet Bill Gates (Bill Gates) bought, through his private investment firm Cascade, a GAMCO convertible bill for $100 million. Chairman of the Board of Directors Viacom (VIA) Summer Redstone (Sumner Redstone) admits, who consults with Gabelli on media industry issues. According to him, Gabelli "was the first, who recognized the power of cable television ”.
Gabelli has always strived to, to associate his name with the names of the heralds of value investing ideas. He and his company GAMCO Investors have established an award for exceptional value investing, named after his favorite Columbia Business School professors as the Graham Value Investment Award, Додда, Murray and Greenwald ". Presentation of this award, known in the investment world as the "Gabelli Prize", takes place at the annual GAMCO client symposium.
In May 2006 year Gabelli submitted documents to Fortune magazine, allowing you to compare the profitability of the investment firm Geico Equities, контролируемой Уорреном Баффетом (Warren Buffett) with the return of the Standard index&Poor’s 500 for the period with 1980 on 2004 yy. A separate column presented the performance of a number of GAMCO accounts for each year, доказывая, that their average annual return for the same period was 19,8% against 20,3% у Geico. Did Gabelli want to prove, which is on par with Buffett? He calls Buffett “a unique phenomenon” and one of the “greatest value investors”, with feigned modesty, that she can't compare herself to him. And then he adds: “What are we for the public market?, topics Buffett is for the private market ”.
