White Papers

Value Investing the Gabelli Way

Avenues for value creation and surfacing value via financial engineering – including spin-offs, exchange offers, Reverse Morris Trust transactions, tracking stocks, share repurchases and REIT conversions – is increasingly being used by public corporations to create and surface value. Our Private Market Value with a CatalystTM methodology, supported by deep, bottom-up research pre disposes us toward companies with underappreciated assets and managements focused on gaining recognition for those assets. Financial engineering has been and will remain a natural focus for investment. In this white paper, we survey a variety of techniques utilized by the likes of Dr. John Malone’s Liberty Media, among others.

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Closed–End Funds

Once used to finance U.S. railroad construction, today’s closed-end funds offer advantages to investors willing to tolerate market swings. Mutual funds come in all shapes, colors and sizes. By far the most popular today are open-end funds (both load and no-load), which offer and redeem shares at the net asset value (NAV) of the portfolio at the end of each trading day. However, the first mutual funds were closed-end funds, which issue a fixed number of shares in public offerings and trade on the exchanges just like the stocks of individual companies. While the net asset value of a closed-end fund portfolio certainly has an impact on its price, closed-end funds can trade at discounts or premiums to NAV.

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Magna Carta of Shareholder Rights

As we have stated in the past, we are neither for nor against management. We are for shareholders. We believe a Magna Carta of Shareholder Rights should exist. What do you as a professional in the investment business think?

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Investment Research

Utilities (U.S.) M&A Update- Buffett Goes Elephant Hunting

The utility sector is in the midst of an investment cycle driven primarily by the need to address climate change and move shale gas to population centers. Regulatory principles have become increasingly constructive and result in healthy and low-risk returns on investment. Recent utility transactions have included large private investors, infrastructure funds, foreign utilities and larger domestic utilities.

ANIMAL HEALTH

Animal health represents a $100 billion global industry that includes pharmaceuticals, vaccines, medical devices, supplies, and veterinary services for both production and companion animals. The production animal market includes livestock such as cattle (both beef and dairy), swine, and poultry and is being driven by increasing global demand for animal protein on both an absolute and per-capita basis. The companion animal market includes dogs, cats, and horses and is being driven by an aging global population that is increasing both its rate of pet ownership and its spending on pet care and services.

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Brown-Forman Corporation

Founded in 1870 to sell Old Forester bourbon, Louisville, KY based Brown-Forman is a pure-play manufacturer and distributor of distilled spirits and wine. The company’s brand portfolio is anchored by its 11.5 million case Jack Daniel’s Tennessee Whiskey brand, but also includes Jack Daniel’s Tennessee Honey, Woodford Reserve, Early Times, and Old Forrester bourbons, el Jimador and Herradura tequilas, Southern Comfort and Chambord liqueurs, Finlandia vodka, Canadian Mist Canadian whisky, and Sonoma-Cutrer wines. In addition, Brown-Forman distributes Korbel Champagne, and produces and sells over 12 million cases of “ready to drink” (RTD) alcohol, primarily under the Jack Daniel’s and New Mix trademarks.

Hillshire Brands Company

Headquartered in Chicago, Illinois, Hillshire Brands was renamed from the Sara Lee Corporation following the tax-free spin-off to shareholders on June 28, 2012 of the international coffee and tea company, D.E MASTER BLENDERS 1753. Hillshire generates over $4 billion in annual revenue of which nearly 90% is generated from meatbased products under leading brands, such as Jimmy Dean, Hillshire Farms, Ballpark, Aidells and Gallo. The remaining businesses include the Sara Lee branded retail bakery products and the Chef Pierre and Sara Lee foodservice bakery products.

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