Hello Reddit!

I’m Mario Gabelli, founder, Chairman and CEO of GAMCO Investors, Inc. (NYSE: GBL). Native of The Bronx, my Undergraduate degree is from Fordham School of Business and my MBA from Columbia Business School. I started as a sell side analyst at Loeb Rhoades in 1962. I established Gabelli Asset Management in 1977 and unfortunately, took it public in 1999.

I was credited by Columbia Business School with adding the idea of Private Market Value (PMV) with a CatalystTM to value investing philosophy.

· #1 Asset Manager – CDA Investment Technologies (Now Thomson Reuters) (1982)

· Morningstar, Inc. - Domestic equity fund manager of the year (1997)

· Barron’s All-Century Team (2000)

· Institutional Investor – Money Manager of the Year (2011)

· New York Society of Security Analysts – Lifetime Achievement Award (2014)

Graham & Dodd + Buffett = Gabelli

“That’s my approach to life: Go where others fear to tread. Hell, I bought a Cadillac in the middle of the oil embargo.” – Mario Gabelli, Forbes

I am joined by Daniel Miller, Managing Director at GAMCO and lead portfolio manager of the Pet Parents’ Fund, a first of its kind actively managed ETMF venturing into the ever-growing pet ecosystem.

Proof: https://www.facebook.com/InvestGabelli/photos/a.880250768746174.1073741828.878236828947568/1499560106815234/?type=3&theater&notif_t=page_post_reaction&notif_id=1531251451095267

Instagram - @investgabelli

Twitter - @mariogabelli @investgabelli

Youtube - GabelliTV

UPDATE: Dan and I thank you, we have consumed our box of peanut brittle. Great questions - we look forward to doing this again.

Comments: 112 • Responses: 48  • Date: 

pjs9935 karma

Lee Cooperman talks about the car rides he shared with you while you were both students at Columbia and how he learned more about investing during those rides than he did in the classroom. How valuable was it to surround yourself with people of similar ambitions, and how do you suggest we align our relationships and private life to our ambitions? How did you identify people in your earlier years to be ones that you wanted to learn and grow with?

Mario_Gabelli50 karma

Pure luck and the fact that there was only one pay phone at Columbia and we had to arm wrestle over who got to call their broker first. Lee Cooperman and Art Samberg were willing to risk their lives while I was the driver. Particularly on snowy or icy days. Somehow, the passion for investing was the fundamental glue that kept us together. So find those that are passionate about what you care for in business.

WarrenBuffett_35 karma

Hello Mr. Gabelli and thank you for taking time out of your day to answer our inquires. I have 2.

J.P. Morgan and others say that economic cycles are lengthening. And I am curious, how do you think Value Investing will fare to lengthening economic cycles?

And what do you believe is an underrated, or a overlooked part of security analysis?

Mario_Gabelli33 karma

I started my career in the 1960s when conglomerates were launched the way digital companies were launched. At that time companies accumulated businesses in different parts of the economic cycle. In the 1980s the urge to do leverage buy outs was overwhelming. The fetish of the early 90’s was “TMT” and dot com.

Economic cycles in the capitalist systems are invariable. You should understand how the owner of the business functions as oppose to those who preach "risk on risk off" in these different market cycles.

pjs9921 karma

You often speak about hiring PhDs (poor-hungry-driven), have you found that the investment industry overlooks many students who do not come from Harvard, Princeton, Yale, etc.? Have driven students coming from so called non-target schools added as much value to your firm as students coming from target schools? (I will be starting university this fall at a decent school but not Ivy League caliber).

Mario_Gabelli28 karma

Great question! and great insight!

We have 240 individuals in our firm and they represent 140 undergraduates from 140 undergraduate schools around the world.

Regrettably - many will call, but few will be chosen.

So it's not only what you've accomplished but also how effective you are in your time spent doing this.

pjs9920 karma

Hi Mr. Gabelli, thank you for doing this! I am 18 years old and an aspiring value fund manager; I read all of Ben Graham's work along with countless other investment books (your firm's book on arbitrage included) and I am also currently managing a small investment account. Given this, what would be your best piece of advice for someone in my position?

Mario_Gabelli30 karma

Great question, I would say i'm delighted you are buying stocks. I don't know your background but my advice is that you work 5 to 9 while others work 9 to 5.

battlehardenedguy18 karma

unfortunately, took it public in 1999.

So apart from this what other decisions in life you regret now ?

Mario_Gabelli26 karma

I don't regret being born in the bronx and I wish everyone else was. In answer to your question- not starting more aggressively in the 70's investing in hedge funds when Steinhardt suggested I do so is something I do regret..

N-Your-Endo18 karma

What piece of advice would you give a CFA Level 3 candidate who wants to go from working at a pension fund to a front office type of role?

Mario_Gabelli67 karma

Continue reading annual reports in an industry in which you want to dominate the knowledge of. Or read all the annual reports and figure out which micro cap company you'd want to take control of. Concurrently, start your own investment company and put yourself in the front office in the beginning.

beerbiz13 karma

Hi Mr. Gabelli, thanks for doing this! I have a couple questions for you.

How much does big data factor into your analyses and decisions?

What is your take on all of the share buybacks taking place, and do you think we are reaching the limit of how much stock public firms can buy back?

Mario_Gabelli27 karma

We have been using data from a variety of sources for the last 50 years following in the tradition of Graham and Dodd. In the early stages we used a abacus and 13 column spread sheet and green eye shades. ha ha.

Today we use google and hit a send button.

luigie8812 karma

Hey Mr Gabelli, Thanks for doing this AMA. I have a few questions I’m looking forward for you to answer

1) How do you deal with uncertainty about when interest rates will rise in your valuations of companies when looking at long term investments (5 year or more discounted cash flows)

2) In your opinion is it better to buy cheap companies or good companies for a small investor?

3) Where do you see the future of value investing going forward? And how does it differ from it was in the past?

Once again thanks for taking the time to do this :)

Mario_Gabelli13 karma

  1. "Plus ca change, plus c'est la meme chose." I am in a camp that take great discomfort in the belief that current valuations will exist 5-10 yrs from now- that is, multiples of EBIDTA minus maintenance capex. therefore an ideal investment is to have companies in your portfolio that have pricing power and that are bought at a reasonable multiple.
  2. All investors are the same. You will have companies that have pricing power that will benefit from the growing U.S.economy and will do as well as they have in the past quarter century in the next quarter century.
  3. Value investing will continue to encompass growth and we'll understand more the value of the service sector of the economy. We'll use the same guiding principles to avoid over-paying for a company's intrinsic value and lose less during market manias.

reddituserguy512 karma

Hi Mario,

Basic question here: What informs your discount rates? How do you get to a number?

As a Level 3 CFA candidate who is not front office/no modelling experience, I've always wondered how the front office gets from 'this company has decent growth potential' to 'the discount rate is X%'

Mario_Gabelli18 karma

In the 1970's we looked at public companies and valued them as though we could own 100%, in other words, the private market value. In turn, we used then, and we use today, the business models that are currently referred to as private equity: How would I finance the company? How much equity? What are the tax dynamics? What's my exit multiple? We could also take the Buffett approach: Love them and never leave them. Both work well if followed patiently and religiously with passion.

Silver-Toaster10 karma

If you did not start GAMCO, what would you have done instead?

Mario_Gabelli24 karma

I would have been a movie producer or as Dan, who is sitting next me me yelled out, "joined the PGA tour."

Sip_py9 karma

What's your handicap?

Mario_Gabelli2 karma

I played 18 holes in Westchester County since January. Handicap is posted at this particular club as somewhere between 24 and 26, I will check next time to be certain.

fireworkfiend10 karma

Hi Mr. Gabelli, what is your favorite part of the job?

Mario_Gabelli41 karma

Getting up at 4AM and reading the Financial Times, BBC News, stuff that is sent to me by Henry van der Ebb and about stocks going down.

lieutenant_lowercase10 karma

Hi Mario,

Are you incorporating alternative data into your investment research process? If so, how?

Mario_Gabelli17 karma

Yes - old fashioned research reports.

Our firm's research process is GAPIC. Gather. Array. Project. Interpret. Communicate.

Brad_Wesley9 karma

Mr. Gabelli:

While I am well familiar with your career as a value investor, given the size and the number of products that you have, how are you able to still be a "value investor" in any meaningful way compared to your early career? Aren't you forced to buy pretty much everything?

Mario_Gabelli18 karma

We knew a lot about a little. Today we are blessed by having 60 teammates that provide input and indeed make investment decisions on areas such as growth, media and entertainment, content and connectivity, pet parents, food of all nations, gold, an so on.

I am their cheerleader.

Fullmetalmarkers9 karma

What do you see as the future of active equity management in 15-20 years?

Mario_Gabelli19 karma

The notion of a.i. momo investing, robo advisers is more than welcomed. The notion of understanding how a business functions, and individuals provide stewardship of OPMs will remain unchanged.

Not much else will change over the next 100 years.

shoozqs8 karma

Hi Mario, thanks again for doing this.

  1. What would you suggest to young people trying to break into the industry? It seems degrees, CFA's, etc. are not enough anymore, especially as money moves from active to passive management at record speeds. Even for me personally, as a PM at a small hedge fund in a major city who holds a degree from a top school and the CFA charter it's almost impossible to even land an interview outside of my network.

  2. What's the best advice ever given to you, be it for investing, life, or anything else?

  3. It seems there's significantly more value placed on intangible assets as they have "out valued" tangible assets in America. How have you changed the way you look at companies in these times of growth/momentum stocks dominating the markets? How does a value investor continue to operate under the same principles given markets don't seem to value "value" at least in the present moment? I know that value investors care far less about what's happening in the markets at any given moment but it seems that it would be harder to keep your investor base, especially as millennials, the primary users of these highly valued assets (FB/GOOG/SNAP/etc) begin to command a higher % of the money given to managers.

  4. Cheap shot: I'm what you'd consider a "PHD". When do I start at GAMCO?

Thank you very much. Appreciate that you're adopting social media and think it's a wise choice.

Mario_Gabelli11 karma

  1. Call. 1-800-GABELLI.

  2. Save.

  3. We find few "cigar butts" in today's US capital Markets.

  4. Go back to answer 1.

getrichslow8 karma

Thanks for doing this Mr. Gabelli,

Can you walk us through what a typical day looked for you today and how has your daily routine changed over the last 10/20 years?

Mario_Gabelli16 karma

The information flow has gone from reading newspapers and watching the Dow Jones news tape to gathering information from our research teams in Tokyo, Shanghai, London, Milan, and our teammates in the US. Secondly, before the taking down of the Berlin wall in November of 1989, our focus was strictly domestic. Today we follow and invest in companies in which we have a core competency on a global basis.

coryrenton8 karma

What is the longest stretch of time between when you made one of your investments and when they finally paid off? What is the largest investing mistake you made that nonetheless was profitable, and what was the largest financial loss you incurred that wasn't, by your definition, a mistake?

Mario_Gabelli10 karma

It is called Earl Scheib (Best slogan, we will paint "any" car "any" color for $19.95) about 4 decades.

objective_investor8 karma

Hi Mario : Where are you finding opportunities in an expensive market ?

Roughly by how much are you discounting the value of companies which are likely to face significant headwinds from Trump's trade war ?

As a value investor, how do you maintain an informational (or value) advantage in an increasingly more connected and digital world?

PS: (@makanda_cliff from Twitter)

Mario_Gabelli12 karma

I'm glad you asked one question at a time. Read Barron's this weekend as we will do a mid-term update.

The market is very efficient and we are looking for great bargains, particularly ones that cater to the strong work ethic of the American farmer.

We are still using pencil, reading annual reports, attending trade shows, and doing everything that involves judgement taking "compounded and accummulated knowledge" and using it for our clients' benefit.

autoshaper7 karma

[deleted]

Mario_Gabelli9 karma

Great questions. Apply for the role of COO and not CIO. I hope to be able to answer at another time - tempus fugit.

Burbank19836 karma

What is the most significant impact of the tax reform you are seeing? Follow up question: how is the sunset of this tax reform going to look like?

Mario_Gabelli16 karma

For US corporations changes that I like

a) territorial vs global

b) tax rate of 21 vs. 35

c) 100% deductibility of capex

The above will reinforce the competitive of business not only in the United States but on a global basis.

As for individuals they will start pursuing SALT free locations.

Johnsoft3496 karma

Mr. Gabelli, as a young investor, I'm always looking for advice about how to get better. Is there any particular habit, process, magic book I should read, etc. that you would recommend?

Or, conversely (maybe a more interesting question), is there any particular piece of "conventional wisdom" or common advise that you think is especially bad??

Thanks

Mario_Gabelli31 karma

First thing, I appreciate your belief in capitalism. As it is one of the best of the various alternatives to allocate capital.

The world is littered with countries that are pursued socialist philosophies - a visit to Cuba or Venezuela would underscore this.

Start by reading Ken Langone's "I love Capitalism!" to see what has made the American meritocracy a global standard.

As for your investment process, I will send you a free copy of Deal Deals and More Deals as well as Roger Murray's presentations on value investing.

nongaap_rebel6 karma

Hi Mr. Gabelli, thank you so much for doing this. I was wondering as a value investor, how do you capture the growth of the recent tech boom?

Mario_Gabelli11 karma

We believe the service sector of the us economy and invest in such simple things as companies that handle ants and bed bugs and the technology for the route person is an example of what we look for. This is an example of the need of entrepreneurs like yourself to come up with applications in the health industry is vital because it is a major issue for people in this country and in the world.

MikeyPicklez2 karma

Do you think the hospitality service industry is also in need of entrepreneurs? Specifically, the bar & restaurant sub-sector?

Mario_Gabelli4 karma

As Joseph Schumpeter said, "creative innovation"

dayMan2-24 karma

If you were to recommend one piece of literature, what would it be?

Mario_Gabelli1 karma

Wall Street Journal.

mattlas4 karma

As a early 30ties portfolio manager myself, I see the increasing flows of money into ETFs and emerging strategies like AI / robo-investing. I sometimes think whether or not ETFs, robo-investing and AI are all threats on fundamental, bottom up research. What are your thoughts about products or emerging technologies replacing the value portfolio manager? Personally speaking, I actually welcome ETFs because you’re making the assumption your basket of stocks are appropriately priced which gives me more opportunity to generate alpha as passive investors ignore buying undervalued stocks or selling overvalued ones.

What advice would you give investment boutiques who have great teams and strategies, but simply miss-out on institutional business due to overall AUM being too low?

I have so many more questions but I'll keep it to these two for now, thank you!

Mario_Gabelli8 karma

As Charlie Munger would say "I cannot add anything."

Mario_Gabelli7 karma

Merge.

objective_investor4 karma

Hi again, Mario. I have an additional question: I am a strong believer in fundamental investing. Over the past decades we have seen the explosion of passive investing relative to active investing. How do you see price creation and price discovery in a world increasingly dominated by passive investing?

Mario_Gabelli4 karma

This question is good but past its due date. I'd love to chat at a more convenient time.

brookswilliams4 karma

What are ways that aspiring investment managers can get access to capital? Or is it more important to have a track record/ degrees and work experience first?

Mario_Gabelli8 karma

No, lose or make money with your own account.

Mario_Gabelli6 karma

Start contacting "angel" investors and share them your dreams and more importantly your business plans.

misterkhalifa4 karma

What are your thoughts on the MSG split? is it worth holding both companies post split or is there more opportunity in one vs. the other?

Mario_Gabelli8 karma

We have been following the Dolan family for some 30 years and have consistently made money on observers challenging the Dolans.

Should the Knicks and Rangers, that is the professional sports team, be split off, we will do more than dribble our way to what will clearly be an interesting opportunity for global investors.

This investment will receive a tail wind by the changes in the PASPA rules.

iklassic3 karma

You are an admirer of the LIBERTY MEDIA Empire. What are your thoughts on Discovery communications? & what else do you think is the most attractive in their portfolio?

Mario_Gabelli6 karma

The Media Mogul fund was created precisely for what you're asking.

lardinator0073 karma

Hi Mr Gabelli! What are your thoughts on fair value measurement?

Mario_Gabelli1 karma

The same as always, we start off by asking what would i pay for the business if I was a private investor. Secondly, I would then assume I am a strategic investor and what would I pay? I would also use some practical experience and ask is this sustainable if nothing happens? - i.e. if there is no take over.

zequalizer3 karma

Let's talk about HRI. They have really started to fire on all cylinders and excess demand that URI can't fill due to running at full utilization is flowing to HRI. They continue to get price and consensus doesn't seem to appreciate the earnings power of the restructured and rejuvenated business. As the largest shareholder, how do you think about the deep discount at which it trades to peer URI on an EV/OEC vs. EV/EBITDA basis? Goldman analyst doesn't seem to understand the business and calling it a short due to this being the "top of the cycle" - your thoughts on this business and outlook at this point during the "cycle"? Would you prefer URI stock or cash in an acquisition scenario?

Mario_Gabelli13 karma

You must be an owner.

GatorGuy53 karma

Good Afternoon Mr. Gabelli,

What books do you recommend to students who want to learn Value Investing? Also, what separates the average money manager from the elite (returns aside)? Thank you for your time and help!

Mario_Gabelli11 karma

Patience and survival separate the average from the elite. Contact Wharton or Columbia professors of value investing and ask for their reading lists.

sjulz312 karma

Sir, thank you for doing this. Will you ever expand the London office or do you hire Europeans for the U.S. offices? Thanks

Mario_Gabelli5 karma

Both.

Stuffmatters_1232 karma

Hi Mr. Gabelli!

How do you value stocks and come up with an intrinsic value? What are your approaches? And can you walk me through an example of how you value stocks?

Thanks!

Mario_Gabelli2 karma

Basically the same way that I learned from Roger Murray from the Columbia Graduate school of business from his course on Security Analysis. We would be delighted to send you a tape of Roger Murray's lectures, please send private message.

In the late 1970s I had to convince investors why they should own publicly traded securities. I introduced the notion of "Private market value" that is what is a company worth that is trading on a public exchange if you could own 100%. And then I introduced the concept of a catalyst. The reason was simple, I had to earn a return in 2 or 3 years on the investment.

beerbiz2 karma

Two more questions, what's your take on the Instagram stories? And do you enjoy a good dark and stormy as much as MP?

Mario_Gabelli7 karma

I am a workaholic. And Dan defined for me what you asked.

ethbison1 karma

Hi Mario,

I have a few questions:

  1. Was is your opinion on blockchain technology? Are you doing anything with this space?

  2. Do you think a value investing strategy will begin to perform after the recent run up and concentration in growth stocks?

  3. What is your take on the Disney, Comcast, Fox situation, especially after the increase bids for Sky?

  4. Are you concerned their is too much concentration in too few stocks due to ETFs?

  5. Where do you see the future of active management moving toward?

  6. Why are your funds fees so high?

  7. What’s the best vehicle for a retail investor to get involved with Gabelli or others with similar investment strategies?

Thanks for taking the time to do this today!

Mario_Gabelli7 karma

  1. Yes
  2. M & A will
  3. I said it best in some years ago- "Let the auction begin." Now I say "Let the auction continue."
  4. Tulips, Canals, railroads, dot-com, hamburger flippers. I wish I had 100% of my wealth in Berkshire Hathaway and never sold. Should you have 10 eggs in a basket and never focus on them or should you have 1000 eggs? Depends on the individual's financial profile, their state of mind and their tax situation. For those that want to own a piece of America over the next 10 years, the S&P index will do just fine.

ifreedman3251 karma

What are your 3 favorite investing books?

Mario_Gabelli1 karma

Graham and Dodd Security Analysis and updates by Roger Murray and most recently by Bruce Greenwald

ryowonn1 karma

Hi Gabelli! Great fan of you!

I have a few questions for you

  1. As an individual investor, how do i start to get familiar with a new industry (Cable,Banking, Automobile) and expand my circle of competence?
  2. Why do you post "Deals,deals,and deals" or in some similar fashion on Twitter? Is there a story behind it?
  3. What are some investors you admire? and why?

Mario_Gabelli1 karma

  1. Start by obtaining data on all public companies in a sector. For example, cable television. Secondly, find any "public offerings" this will help with the jargon. Third, contact the local CFA chapter and ask for any data they have. Fourth, contact and accounting form that audits a cable company and see if they will share information. I would also contact the industry trade association(s).
  2. That is the title of our book on arbitrage, which is a proven way to make money. You should read our second book on the subject: "Merger Masters"
  3. Warren Buffett, Charlie Munger, Marty Whitman, Seth Glickenhaus, John L. Loeb, Roy Neuberger, Sam Zell---- Leon Cooperman, Chuck Royce... and I could continue

Kongregater1231 karma

How do you start investing if you don't have alot of money?

Mario_Gabelli1 karma

Fairly simple, go online and instead of a beer or a coffee put the money into an account with a firm like Betterment

Guac_in_my_rarri1 karma

Mr. Gabelli,

Thank you for doing this! I am very late to the party but as a college student, what would I need to do to become a trader/broker? I currently have a sales internship this summer brokering trucks loads (major is marketing/supply chain).

Thank you again for doing this!

Mario_Gabelli2 karma

I don't know where you live. But if you are within an hour drive by bike of a retail investment firm, volunteer to work for nothing.

Heidi_Trismegistus1 karma

What is funnier...witch finger Bugles or duck mouth Pringles?

Mario_Gabelli1 karma

Broken pretzels by Snyders

kekanga1 karma

Hey Mario, I'm still a student but have been increasingly interested in VCs and investment firms. Just read Liars Poker by Michael Lewis and was surprised from the stories of the early mortgage bond market. Are there any areas you believe could use more regulations? Such as crypto?

Mario_Gabelli4 karma

Yes. The way that ETFs control over 5% of companies and how they vote --- short sellers filling holdings on their 13Fs---- reinstatement of the uptick rule ------ shortening the time period which 13Ds are filed --- Eliminate lawsuits over cheese burgers.

Mug_Ruith23691 karma

Mario, have you spent any time analyzing the CBD industry? I’ve tried to ignore it as another “tulip” fad but looking into a certain Beverage company with exposure has lead me down a rabbit hole. I’ve begun to look at the possibility of the CBD market through value glasses. I think there are a few key details that may make it cheap- government regulation risk, lack of analysts, misunderstood (viewed as recreational not wellness), institutional unwillingness to invest.

Not to lose the opportunity for career advice- if you could recommend one part time gig to us what would it be?

Mario_Gabelli4 karma

We are trying to figure out the impact in Amsterdam on consumption of distill spirits, beer, and wine.

Career advice: Pray to work for Langone or Cooperman

Mug_Ruith23692 karma

So, you're playing defense. Anecdotally, I would say the the higher end stuff is less likely to lose share. It is the corona, coors, and bud light that will lose sales. Spirits and wines are more insulated. My newest thesis is to buy scotch and if the price doesn't go up, i get to drink it.

Interesting paper addressing your concerns:

"We find that marijuana and alcohol are strong substitutes. Counties located in MML states reduced monthly alcohol sales by 13 percent, which is a consistent finding across several empirical specifications. In fact, when we focus our analysis to bordering counties only, we find that those in MML have lower a reduction in monthly aggregate alcohol sales of 20 percent, with comparable results for beer and wine. Interestingly, this latter result is larger compared to the main full-sample results."

Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3063288

Mario_Gabelli1 karma

You clearly have not bought Pappys

TH3_Dude0 karma

When is the bear market?

Mario_Gabelli1 karma

Be patient.