A resource page devoted to Mario Gabelli page has been added to ValueWalk.
3. We will be adding 1-2 investor resource pages a week.
Below is a partial excerpt followed by link to full page, which can also be found under the top toolbar Value investors, or at the following link-
Brief excerpt below:
BUSINESS PHILOSOPHY OF MARIO GABELLI
One of Gabellis great investment themes is the notion of time and place. You can be anywhere, anytime. The distribution of information is going through a major change. Some countries are getting it first time; some are finding new ways to communicate. On the copyright side, he looks for things that travel well like music, MTV, jazz, films, sports, news and entertainment. Gabelli looks for a “catalyst” which will help narrow the “private market value” and the stock price to give him a rate of return within a definable time. The “catalyst” is an important part of what pulls the investment trigger some mechanical and arithmetic exercises. Examples of “catalyst” are change in regulation, divorce or death of a founder, family block that wants a change in their tax situation. It is no use if a stock trades at $1 when the private market value is $2, and in ten years the stock trades at $1.5 and the private market value is still $2. What you want is the private market value grows at least faster than inflation plus a hurdle rate.
Gabelli employs a research driven and value oriented approach to investment analysis. For the analysis of stocks, he implemented the theory of value investing, which he had learnt at Columbia University. He developed a metric of his own known as “private market value” (PMV). His proprietary Private Market Value with a catalyst methodology is a widely used analytical tool for value investors. This valuation metric places greater emphasis on analyzing a company’s cash flows and gives less importance to accounting profits. PMV means the price that a potential buyer would be willing to pay if she was to acquire the entire company, incorporating any synergies and premium for control. This method of valuing a company was extensively used in the analysis of LBO transactions (leveraged buyouts), whereby entire company is taken private by using borrowed funds. The methodology used in calculating PMV is often different from the standard way of measuring the value of public companies.