S&P Awards GAMCO “Platinum Grade”
GAM Star GAMCO US Equity fund and its Private Market Value with a Catalyst ™
(PMV) strategy awarded highest grade for nine straight years
RYE, N.Y. -- February 6, 2013
GAMCO Investors, Inc. (GBL: NYSE) announced that Standard & Poor’s has awarded
its highest Platinum grade to the GAM Star GAMCO US Equity fund and to GAMCO’s
underlying Private Market Value with a Catalyst ™ (PMV) stock selection
strategy for the ninth year running.
Mario Gabelli, Chairman of GAMCO Investors, Inc. said,"Our global analyst and
portfolio investment team is very honored that our fundamental PMV research
driven stock selection process has extended its S&P top rating streak to now
GAM Star GAMCO US Equity is one of only two funds among the 61 currently rated
in S&P’s America Sector, as of October 31, 2012, to receive the Platinum
grade. The fund was launched in July 2011 and its predecessor, GAM GAMCO
Equity initiated in October 1987.
The S&P Platinum grade is a widely acknowledged measure of excellence, awarded
only when, in S&P’s words:
The fund demonstrates the highest standards of quality in its sector based on
its investment process and management’s consistency of performance as compared
to funds with similar objectives.
In affirming the Platinum grade for the fund, S&P stated:
Gabelli's experience as an investor, together with a solid long-term track
record which has been built by adhering to a disciplined process, supports the
retention of the fund's S&P Capital IQ Platinum grading.
The following is excerpted from S&P’s Platinum grade report dated January 21,
Gabelli is a highly experienced investor who has acquired a wealth of
knowledge during his 45-year investment career. He is supported by a
well-resourced team of 34 equity analysts who are guided by his thematic and
sector views when conducting their bottom-up driven research. This leads to
biases to certain industries, such as media (+11.2% relative to benchmark) and
capital goods (+10.7%), and is a reflection of the fact that portfolio
construction is carried out with little regard to its benchmark. A diversified
portfolio of 100-150 positions is therefore important to control risk.
In the last 18 months, there has been a particular emphasis on the financial
engineering activities of companies, which has led to new investments in firms
such as DE Master Blenders 1753 and Fortune Brands Home and Security. These
were spun out of Sara Lee (now known as Hillshire Brands Company), and Fortune
Brands (now known as Beam), respectively. Gabelli has also benefited from an
increasing trend of companies looking to convert to Reit status with Ryman
Hospitality Properties – formed following Gaylord Entertainment's decision to
pursue this process - an example of this.
GAMCO's team of global equity research analysts is broadly split between seven
sector categories: aerospace and capital goods; consumer; health; energy and
utilities; media and telecoms; natural resources; and financial services. One
of four senior analysts leads on at least one of these sector groups.
Analysts follow their sectors on a global basis and are responsible for the
gathering, arraying and projection of company data for making investment
decisions. Experience in the team varies considerably. The majority of the
analysts are US-based, with the rest in London, Hong Kong, Tokyo and Shanghai.
On the Fund’s Management style, S&P wrote:
The bottom-up, value-driven investment process employed by Mario Gabelli is
founded on the principles of Graham & Dodd, where the emphasis is on investing
in undervalued stocks that have a high probability of achieving their
intrinsic or private market value (PMV) over time through the intervention of
a discernible catalyst.
The PMV is defined as the value that Gabelli believes an informed investor
would be willing to pay to own the entire company. Catalysts could be a
specific event (M&A and management changes) or be sector-related (regulatory
changes and industry consolidation) with varying time horizons.
Research is focused around themes that reflect Gabelli's areas of interest and
expertise. There will often be a bias to industries, such as media, where a
wealth of industry data can be used to compare asset values. Fundamental
analysis helps to highlight companies with a strong franchise, shareholder
friendly management and the ability to generate sustainable free cash flow.
Meeting company management is a key part of the process, and the team makes
more than 1,000 on-site visits a year.
To determine whether valuations are attractive, analysts estimate the
direction and growth rates of EBITDA, cash flow and earnings, as well as the
company's PMV. The best opportunities tend to be found in the under-researched
small-/mid-cap stocks. Positions are built gradually according to conviction,
with the average holding period being three to five years. Turnover is very
low, as the team is prepared to wait for catalysts to materialise.
Since the final portfolio of 100-150 positions is built from a purely
bottom-up basis, there is little regard paid to the benchmark S&P 500 index.
While deviations at the stock and sector level are unconstrained, individual
positions are usually capped at 5%, with the top 10 holdings comprising 25-30%
of the fund. Risk is largely controlled through the construction of a broadly
GAM Star GAMCO US Equity was awarded a Platinum grading (previously
categorized as AAA) in November 2011. GAM GAMCO Equity was rated AAA by S&P
from October 2004 to October 2011. GAM Star GAMCO US Equity – USD Class was
seeded by the transfer of the holdings of GAM GAMCO Equity on 27 July 2011.
GAM Star GAMCO US Equity – USD Class has inherited the performance and price
history of GAM GAMCO Equity, which incepted on 20 October 1987. All references
to price and performance for periods to 27 July 2011 refer to the performance
of GAM GAMCO Equity. GAM GAMCO Equity is a company established in the British
Virgin Islands structured to operate in a similar way to an open-ended unit
trust and had the sameinvestment objective and policy as GAM Star GAMCO US
Equity. The fund has been sub-advised by GAMCO Asset Management Inc. (a
subsidiary of GAMCO Investors, Inc) for GAM, continuously since October 1987.
Standard & Poor’s is a globally recognized provider of objective fund
information as well as ratings on debt securities; a leading authority in the
investment world. S&P’s fund evaluation process is based on an in-depth
analysis of both the quantitative and qualitative factors considered to be key
contributors to long-term investment performance. These include the historic
performance, volatility and portfolio construction of a fund; the manager’s
investment process, risk control, skill, experience and resources; and the
group’s corporate management, investment culture and stability.
GAMCO Investors, Inc., through its subsidiaries, manages private advisory
accounts (GAMCO Asset Management Inc.), mutual funds and closed-end funds
(Gabelli Funds, LLC), and partnerships and offshore funds (Gabelli Securities,
Inc.). As of December 31, 2012, GAMCO had $36.4 billion in assets under
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Our disclosure and analysis in this press release contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements because they do
not relate strictly to historical or current facts. They use words such as
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,”
and other words and terms of similar meaning. They also appear in any
discussion of future operating or financial performance. In particular, these
include statements relating to future actions, future performance of our
products, expenses, the outcome of any legal proceedings, and financial
results. Although we believe that we are basing our expectations and beliefs
on reasonable assumptions within the bounds of what we currently know about
our business and operations, there can be no assurance that our actual results
will not differ materially from what we expect or believe. Some of the factors
that could cause our actual results to differ from our expectations or beliefs
include, without limitation: the adverse effect from a decline in the
securities markets; a decline in the performance of our products; a general
downturn in the economy; changes in government policy or regulation; changes
in our ability to attract or retain key employees; and unforeseen costs and
other effects related to legal proceedings or investigations of governmental
and self-regulatory organizations. We do not undertake to update publicly any
forward-looking statements if we subsequently learn that we are unlikely to
achieve our expectations or if we receive any additional information relating
to the subject matters of our forward-looking statements.
GAMCO Investors, Inc.
Douglas R. Jamieson
President and COO
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