GAMCO Investors, Inc. (New York Stock Exchange (“NYSE”): GBL),
a company incorporated under the laws of Delaware, is a widely-recognized provider
of investment advisory services to open and closed-end funds, institutional
and private wealth management investors principally in the United States. We
generally manage assets on a discretionary basis and invest in securities through
various investment styles. Our revenues are based primarily on assets under
management (“AUM”) and to a lesser extent, incentive fees.
Our AUM are organized into three groups:
Institutional and Private Wealth Management: We provide advisory services to
a broad range of investors, including corporate retirement plans, foundations,
endowments, jointly-trusteed plans and public funds, private wealth clients
and also serve as sub-advisor to third party investment funds including registered
investment companies (“Institutional and Private Wealth Management”).
Open and Closed-End Funds: We provide advisory services to twenty-one open-end
funds and fourteen closed-end funds under Gabelli, GAMCO and Comstock brands
(collectively, the “Funds”). Additionally, we provide administrative
services to seven open-end funds, with AUM of $1.2 billion on December 31, 2015,
under the TETON Westwood brand.
SICAV: We provide advisory services to one fund under the GAMCO brand, the GAMCO
International SICAV (the “SICAV”). The SICAV has two sub-fund strategies,
the GAMCO Merger Arbitrage Fund and the GAMCO All Cap Value Fund.
Our business strategy targets global growth of the franchise through continued
leveraging of our proven asset management strengths including our brands, long-term
performance record, diverse product offerings and experienced investment, research
and client relationship professionals. In order to achieve performance and growth
in AUM and profitability, we are pursuing a strategy which includes the following
key elements:
Gabelli “Private Market Value (PMV) with a CatalystTM” Investment
Approach. While we have expanded our investment product offerings, our “value
investing” approach remains the core of our business. This method is based
on and has evolved from the value investing principles articulated by Graham
& Dodd in 1934 and enhanced by Roger Murray and Bruce Greenwald, and has
been further augmented by Mr. Gabelli, CFA, with his development of Private
Market Value (PMV) with a CatalystTM value investment methodology.
Private Market Value (PMV) with a CatalystTM investing is a disciplined, research-driven
approach based on intensive security analysis. In this process, we generally
select stocks whose intrinsic value, based on our estimate of current asset
value and future growth and earnings power, is significantly different from
the value reflected in the public market. We then calculate the stock’s
PMV, which is defined as the price an informed industrial buyer would likely
pay to acquire the business.
Establishing Relationship Offices. We have nine offices including New York,
Chicago, Greenwich, London, Palm Beach, Reno, Shanghai, St. Louis and Tokyo.
We will continue to evaluate adding additional offices throughout the world.
Incentive Fees. Since a growing percentage of the firms revenues may be
directly linked to performance-based fees (largely recognized in the fourth
quarter), this may increase the variability of our revenues and profits. As
of December 31, 2015, approximately $2.7 billion of our AUM are managed on a
performance fee basis including $1.6 billion of Institutional and Private Wealth
Management assets, $729 million of preferred issues of closed-end funds and
$364 million in The GDL Fund.
Expanding Mutual Fund Distribution. We continue to expand our distribution
network primarily through national and regional brokerage firms and have developed
additional classes of shares for most of our mutual funds for sale through these
firms and other third party distribution channels. We have increased our wholesaling
efforts to market the multi-class shares, which have been designed to meet the
needs of investors who seek advice through financial consultants.
Increasing Presence in Private Wealth Management Market. Our private wealth
management business focuses, in general, on serving clients who have established
an account relationship of $2.5 million or more with us. According to industry
estimates, the number of households with over $2.5 million in investable assets
will continue to grow, subject to ups and downs in the equity and fixed income
markets. With our 38-year history of serving this segment, long-term performance
record, customized portfolios tax-sensitive investment strategy, brand name
recognition and broad array of product offerings, we believe that we are well-positioned
to capitalize on the growth opportunities in this market.
Increasing Marketing for Institutional and Private Wealth Management. The
Institutional and Private Wealth Management business was principally developed
through direct marketing channels. We plan to augment our institutional sales
force through the addition of staff to market directly to the consultant community
as well as through our traditional marketing channels.
Attracting and Retaining Experienced Professionals. We offer significant
variable compensation that provides opportunities to our staff. The ability
to attract and retain highly-experienced investment and other professionals
with a long-term commitment to us and our clients has been, and will continue
to be, a significant factor in our long-term growth.
Hosting of Institutional Investor Symposiums. We have a tradition of sponsoring
institutional investor symposiums that bring together prominent portfolio managers,
members of academia and other leading business professionals to present, discuss
and debate current issues and topics in the investment industry. These symposiums
have included:
Capitalizing on Acquisitions, Alliances and Lift-outs. We intend to selectively
and opportunistically pursue acquisitions, alliances and lift-outs that will
broaden our product offerings and add new sources of distribution. On October
1, 1999, we completed our alliance with Mathers and Company, Inc. and now act
as investment advisor to the GAMCO Mathers Fund, and in May 2000, we added Comstock
Partners Funds, Inc., (renamed Comstock Funds, Inc.). The Mathers and Comstock
funds are part of our Non-Market Correlated mutual fund product line. In November
2002, we completed our alliance with Woodland Partners LLC, a Minneapolis-based
investment advisor focused on investing in small capitalization companies. On
March 11, 2008, Gabelli Funds, LLC (“Funds Advisor”) assumed the
role of investment advisor to the AXA Enterprise Mergers and Acquisitions Fund,
subsequently renamed Gabelli Enterprise Mergers and Acquisitions Fund, a fund
that had been sub-advised by GAMCO since the fund’s inception on February
28, 2001. On August 1, 2010, the clients of Florida-based NMF Asset Management
became part of the Institutional and Private Wealth Management operation of
GAMCO Asset Management Inc. (“GAMCO Asset”). On November 2, 2015,
the investment team of Dinsmore Capital, a specialist in convertible bond investing
and formerly the manager of The Bancroft Fund and the Ellsworth Growth &
Income Fund joined Gabelli Funds.
We believe that our growth to date is traceable to the following factors:
Strong Industry Fundamentals: According to data compiled by the U.S. Federal
Reserve, the investment management industry has grown faster than more traditional
segments of the financial services industry, including the banking and insurance
industries. Since GBL began managing assets for institutional and private wealth
management clients in 1977, world equity markets have grown at a 10.2% compound
annual growth rate through December 31, 2015 to approximately $64.6 trillion(a).
The U.S. equity market comprises about $23.5 trillion(a) or roughly 36% of world
equity markets. We believe that demographic trends and the growing role of money
managers in the placement of capital compared to the traditional role played
by banks and life insurance companies will result in continued growth of the
investment management industry.
Long-Term Performance: We have a superior long-term record of achieving relatively
high returns for our Institutional and Private Wealth Management clients. We
believe that our performance record represents a competitive advantage and a
recognized component of our franchise.
Stock Market Gains: Since we began managing for institutional and private
wealth management clients in 1977, our traditional value-oriented Institutional
and Private
Widely-Recognized “Gabelli” and “GAMCO” Brand Names:
For much of our history, our portfolio managers and investment products have
been featured in a variety of financial print media, including both U.S. and
international publications such as The Wall Street Journal, Financial Times,
Money Magazine, Barrons, Fortune, Business Week, Nikkei Financial News, Forbes
Magazine, Consumer Reports and Investors Business Daily. We also underwrite
publications written by our investment professionals, including Deals…Deals…and
More Deals, which examines the history of merger arbitrage and Global Convertible
Investing: The Gabelli Way, a comprehensive guide to effective investing in
convertible securities.
Diversified Product Offerings: Since the inception of our investment management
activities, we have sought to expand the breadth of our product offerings. We
currently offer a wide spectrum of investment products and strategies, including
product offerings in U.S. equities, U.S. fixed income, global and international
equities, and convertible securities.