holland44
07 Feb 2017
Introduction to this trust I found a useful introduction to this trust at [link] name Gabelli was unfamiliar to me, but like Harbourvest, a private equity trust with a US-orientation that I've also been looking at, it is apparently well-regarded in the States."[The trust's approach] is based on classic Benjamin Graham and David Dodd-style value investing, but with a difference, as while the managers aim to understand all aspects of a business and its intrinsic value, this classic approach is taken one step further by analysing what that business is worth to an informed buyer in a privately negotiated transaction. As such, they seek out companies whose share prices are trading at a discount to what they deem to be the private market value of that given stock (which they describe as a ‘margin of safety’
. They will, however, only buy companies where they see a catalyst for that value to be realised including the likes of spin-offs, management changes, tax reforms and financial engineering.Though not an out-and-out M&A process, it is little surprise that over the 30-year plus life of the Gabelli All Cap Value strategy, around 10% per year of holdings have been subject to some form of M&A activity – usually adding value for investors.This process has ensured the likes of the Gabelli Asset Fund, which was launched in the mid-1980s, has beaten the S&P 500 by more than 1,200 percentage points since inception."The trust has only been operating for a couple of years, so it's early days, and of course there are established competitors like JUSC or NAIT to look at, as well as good numbers of private equity trusts with a US focus. But it does look like a promising way to invest in the US if, like me, you are inclined to believe it's possible to beat index-trackers, provided you use human intelligence to find value and growth, usually in the smaller end of the market.
