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Let’s Meet Mario Gabelli

Posted by Larry Doyle on April 8, 2009 7:27 PM |

Mario Gabelli of GAMCO Investors is widely regarded as one of the top stock pickers in the business. His main fund was down only 1% over the last twelve months.

I have had the pleasure of meeting Mario a few times. Despite his enormous success, I definitely get the impression that Mario views himself as that young, aggressive guy fresh off the streets of the Bronx who still needs to earn his stripes everyday.

He shares some insights on a few specific companies in this video provided by WSJ’s MarketWatch.

For those interested in the markets, Mario is not one who takes kindly to “outperforming an index.”  Mario hates to lose money under any circumstances.

 

LD

  • Always Learning

    LD –

    If over the past 12 months Gabelli’s main fund was only down 1% when most other funds were down at least 20%, wouldn’t that raise red flags? All the talk surrounding Madoff and other schemes seem to point out that warning signals were missed. In other words, investment results that are “too good to be true” can indicate something’s not on the up and up. How can an investor discern the difference between a very talented asset manager and a situation that really is too good to be true?

  • Larry Doyle

    Always Learning…great question. Prior to investing in any fund, one needs to not only get the marketing materials but the audited statements of the fund.

    Review the fund’s investments. You can look at the individual stock holdings and check the reported performance versus the actual performance of the stocks.

    Check to see if there was a hedging strategy employed (shorting an index, using swaps, shorting individual stocks)
    and how that factored into the overall performance.

    Make sure there is a qualified accountant employed. Make sure there is a separate custodian and/or trustee so assets are held in separate accounts.

    Get outside reviews of the fund by qualified analysts.

    When in doubt, make a list of questions and make sure they are totally explained in layman’s terms.

    The red flags with Madoff should have shown up in the fact that he was in cash at the end of each month. I have NEVER heard of such a thing. He did not have a qualified accounting firm. He did not have a separate custodian/trustee. He most assuredly did not have qualified third party analysts who provided a thorough analysis of his buisness. For all these reasons, I am convinced that the fund of funds that fed Madoff are TOTALLY complicit and should be prosecuted to the fullest extent of the law.

    Great question. Hope this provides some decent guidance.






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