(Source: Business Wire)
GAMCO Investors, Inc. (GAMCO) (NYSE: GBL) announced third quarter 2009
earnings of $0.53 per fully diluted share versus $0.43 per fully diluted
share in the third quarter 2008. Net income was $14.7 million in the
third quarter 2009 compared to $12.0 million in the third quarter 2008.
On a sequential basis, Assets Under Management (AUM) were $24.5 billion
as of September 30, 2009, 14.5% higher than June 30, 2009 AUM of $21.4
billion. Importantly, Institutional and Private Wealth Management AUM
increased 17.0% to $10.3 billion at September 30, 2009 from $8.8 billion
at June 30, 2009.
For the nine months ended September 30, 2009, earnings were $1.32 per
fully diluted share equal to the $1.32 per fully diluted share in 2008.
Net income was $36.2 million for the nine months ended September 30,
2009 compared to $36.9 million in the prior year's period.
The Company had adjusted cash and investments, net of debt,
noncontrolling interest and mandatorily redeemable shares of $496.4
million or $17.97 per share at September 30, 2009. Book value was $482.0
million or $17.44 per share at September 30, 2009 which excludes
noncontrolling interests of $3.9 million.
Investment Performance
Relative long-term investment performance remains strong. At least 68%
of all our mutual funds performed in the top half of their Lipper
categories on a one, three, five and ten-year total return basis as of
September 30, 2009. See Lipper chart on page 16. The following funds
that we distribute have a 4 or 5-star three year Morningstar RatingTM.
See Morningstar chart that follows.
-- The Gabelli ABC Fund -- The GAMCO Westwood Mighty Mites(SM) Fund
-- " Asset Fund -- " Global Telecommunications Fund
-- " Blue Chip Value Fund -- " Mathers Fund
-- " Equity Income Fund -- " Westwood Balanced Fund
-- " Small Cap Growth Fund -- " Westwood Equity Fund
-- " Utilities Fund
-- " Enterprise Mergers and Acquisitions Fund
-- " Woodland Small Cap Value Fund
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Gabelli Funds Morningstar Ratings Based on Risk Adjusted returns as of September 30, 2009 for funds that we distribute
Overall Rating 3 Year Rating 5 Year Rating 10 Year Rating
FUND Morningstar Category Stars # of Funds Stars # of Funds Stars # of Funds Stars # of Funds
Gabelli ABC AAA Mid-Cap Blend Five Stars 387 Five Stars 387 Five Stars 306 Four Stars 146
Gabelli Asset AAA Mid-Cap Blend Four Stars 387 Four Stars 387 Four Stars 306 Three Stars 146
Gabelli Blue Chip Value AAA Large Value Three Stars 1133 Four Stars 1133 Four Stars 933 Two Stars 453
Gabelli Equity Income AAA Large Value Five Stars 1133 Five Stars 1133 Five Stars 933 Five Stars 453
Gabelli Small Cap Growth AAA Small Blend Five Stars 560 Five Stars 560 Five Stars 452 Four Stars 234
Gabelli SRI Green AAA Mid-Cap Blend n/a n/a n/a n/a n/a n/a n/a n/a
Gabelli Utilities AAA Specialty -- Utilities Five Stars 95 Four Stars 95 Four Stars 80 Five Stars 52
Gabelli Value A Mid-Cap Blend Two Stars 387 Two Stars 387 Two Stars 306 Two Stars 146
Gabelli Woodland Small Cap Value AAA Small Blend Three Stars 560 Four Stars 560 Three Stars 452 n/a 234
GAMCO Global Convertible Secs AAA Convertibles One Star 66 One Star 66 One Star 61 One Star 44
GAMCO Global Growth AAA World Stock Two Stars 536 Three Stars 536 Three Stars 440 One Star 253
GAMCO Global Opportunity AAA World Stock Three Stars 536 Three Stars 536 Three Stars 440 Three Stars 253
GAMCO Global Telecommunications AAA Specialty -- Communications Four Stars 33 Four Stars 33 Four Stars 32 Three Stars 13
GAMCO Gold AAA Specialty -- Precious Metals Three Stars 61 Three Stars 61 Three Stars 61 Three Stars 36
GAMCO Growth AAA Large Growth Three Stars 1515 Three Stars 1515 Three Stars 1255 Two Stars 653
GAMCO International Growth AAA Foreign Large Growth Three Stars 202 Three Stars 202 Three Stars 153 Three Stars 81
GAMCO Mathers Conservative Allocation Two Stars 499 Four Stars 499 Two Stars 332 One Star 139
GAMCO Westwood Balanced AAA(a) Moderate Allocation Four Stars 956 Four Stars 956 Four Stars 795 Four Stars 455
GAMCO Westwood Equity AAA(a) Large Value Four Stars 1133 Four Stars 1133 Four Stars 933 Four Stars 453
GAMCO Westwood Income AAA(a) Moderate Allocation Two Stars 956 One Star 956 Two Stars 795 Five Stars 455
GAMCO Westwood Intermediate AAA(a) Intermediate-Term Bond ThreeStars 954 ThreeStars 954 ThreeStars 836 ThreeStars 480
GAMCO Westwood Mighty Mites AAA(a) Small Blend Five Stars 560 Five Stars 560 Five Stars 452 Five Stars 234
GAMCO Westwood SmallCap Equity AAA(a) Small Blend Two Stars 560 Three Stars 560 Four Stars 452 One Star 234
Gabelli Enterprise Mergers & Acquisitions Y Mid-Cap Blend Four Stars 387 Four Stars 387 Four Stars 306 n/a 146
Comstock Capital Value AAA Bear Market n/a n/a n/a n/a n/a n/a n/a n/a
Percent of Rated funds rated 4 or 5 stars 43.48% 56.52% 52.17% 38.10%
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The Overall Morningstar Rating is derived from a weighted average of
the performance figures associated with its three, five and ten year (if
applicable) Morningstar Rating metrics. Data presented reflects past
performance, which is no guarantee of future results. Ratings are for
Class AAA, A or Y shares only, other classes may have different
performance characteristics. For each fund with at least a three year
history, Morningstar calculates a Morningstar Rating based on a
Morningstar Risk-Adjusted Return measure that accounts for variation in
a fund's monthly performance (including the effects of sales charges,
loads, and redemption fees), placing more emphasis on downward
variations and rewarding consistent performance. The top 10% of the
funds in each category receive 5 stars, the next 22.5% receive 4 stars,
the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the
bottom 10% receive 1 star. (Each share class is counted as a fraction of
one fund within this scale and rated separately, which may cause slight
variations in the distribution percentages.) Strong relative performance
is not indicative of positive fund returns. 2008 absolute performance
for most funds was negative. © 2009 Morningstar, Inc. All rights
reserved. The information contained herein: (1) is proprietary to
Morningstar and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible
for any damages or losses arising from any use of this information. Investors
should consider the investment objectives, risks, sales charges and
expenses of the fund carefully before investing. The prospectus contains
more information about this and other matters. The prospectus should be
read carefully before investing. Distributed by Gabelli & Company, One
Corporate Center, Rye, NY 10580 Call 1-800-GABELLI (422-3554) for a
prospectus.
The inception date for the Gabelli SRI Green Fund was June 1, 2007. The
inception date for the Gabelli Woodland Small Cap Value Fund was
December 31, 2002. The inception date for the Gabelli Enterprise Mergers
& Acquisitions Fund was February 28, 2001. The inception date for the
Comstock Capital Value Fund was October 10, 1985.
(a) Managed by Teton Advisors, Inc. not Gabelli Funds, LLC.
Assets Under Management -- Up 14.5% from June 30, 2009
Assets Under Management (AUM) were $24.5 billion as of September 30,
2009, 14.5% higher than June 30, 2009 AUM of $21.4 billion but 2.8%
below September 30, 2008 AUM of $25.2 billion. Equity AUM were $22.8
billion on September 30, 2009, 16.3% above the June 30, 2009 equity AUM
of $19.6 billion and 5.8% below the $24.2 billion on September 30, 2008.
Highlights are as follows:
Our institutional and private wealth management business ended the
quarter with $10.3 billion in separately managed accounts, up 17.0%
from the June 30, 2009 level of $8.8 billion but 5.5% lower than the
$10.9 billion on September 30, 2008.
Our closed-end funds had AUM of $4.4 billion on September 30, 2009,
rising 15.8% from the $3.8 billion on June 30, 2009 but 10.2% below
the $4.9 billion on September 30, 2008.
Our open-end equity funds AUM were $7.9 billion on September 30, 2009,
17.9% more than the $6.7 billion on June 30, 2009 nearly matching the
$8.0 billion on September 30, 2008.
AUM in The Gabelli U.S. Treasury Money Market Fund, our 100% U.S.
Treasury money market fund, ranked #2 for the first nine months of
2009 and #2 for the last twelve months ended September 30, 2009 by
Lipper based on total return among 74 U.S. Treasury Money Market
Funds, was down slightly to $1.6 billion at September 30, 2009 from
$1.8 billion on June 30, 2009 and was 60.0% higher than the September
30, 2008 AUM of $1.0 billion.
Our investment partnerships AUM were $291 million on September 30,
2009 versus $266 million on June 30, 2009 and $340 million on
September 30, 2008.
We have the opportunity to earn base fees and incentive fees for
certain institutional client assets, assets attributable to preferred
issues for our closed-end funds, our Gabelli Global Deal Fund (NYSE:
GDL) and investment partnership assets. As of September 30, 2009,
assets with incentive based fees were $2.7 billion, in line with the
$2.7 billion on June 30, 2009 and 12.9% below the $3.1 billion on
September 30, 2008.
The Gabelli U.S. Treasury Money Market Fund ranked #2 out of 74 funds
for the third quarter of 2009, #2 out of 74 funds for the one-year
period, #2 out of 65 funds for the five-year period and #2 out of 44
funds for the ten-year period. The rankings are based on total return
over the length of the period. Past performance is not indicative of
future results. Investment returns and yield will fluctuate.
Income will be subject to federal income tax. An investment in the Fund
is not guaranteed nor insured by the Federal Deposit Insurance
Corporation or any government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund. During the respective
periods, the Adviser has waived certain fees and reimbursed expenses.
Without such reimbursements or waivers return and rankings would have
been lower.
Investors should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. The
prospectus, which contains more complete information about this and
other matters, should be read carefully before investing. You
can obtain a prospectus by calling Gabelli & Company, Inc. at
1-800-GABELLI (1-800-422-3554),or by visiting http://www.gabelli.com.
Distributed by Gabelli & Company, Inc. One Corporate Center, Rye, NY
10580
Revenues
For the Quarter
Investment advisory fees for the third quarter 2009 were $41.0 million,
a decline of 21.6% from $52.3 million in the 2008 third quarter
(However, third quarter 2009 revenues were 13.9% higher than second
quarter 2009):
Open-end fund revenues were $19.1 million versus $23.3 million in
third quarter 2008, a drop of 18.0% primarily due to lower average AUM.
Our closed-end fund revenues fell 27.6% to $7.6 million in the third
quarter 2009 from $10.5 million in 2008 on lower AUM.
Institutional and high net worth separate account revenues, which are
based primarily upon prior quarter-end AUM, decreased 23.0% to $13.7
million from $17.8 million in third quarter 2008.
Investment partnership revenues were $0.5 million, a decrease of $0.2
million or 28.6% from $0.7 million in 2008.
Our institutional research services subsidiary achieved revenues of $4.6
million in the third quarter 2009, up 12.2% from the third quarter 2008
amount of $4.1 million.
Open-end fund distribution fees and other income were $6.0 million for
the third quarter 2009, a decrease of $0.6 million, or 9.1% from the
prior year quarter of $6.6 million. The main driver of this decrease was
reduced quarterly average assets in our open-end equity funds that
generate distribution fees.
For the Nine Months
Investment advisory fees for the nine months ended September 30, 2009
were $112.1 million, a decline of 31.8% from $164.3 million in the 2008
period:
Open-end fund revenues were $51.7 million versus $71.8 million for the
nine months ended September 30, 2008, a drop of 28.0% primarily due to
lower average AUM.
Our closed-end fund revenues fell 41.0% to $20.0 million for the nine
months ended September 30, 2009 from $33.9 million in 2008 on lower
AUM.
Institutional and high net worth separate account revenues, which are
based primarily upon prior quarter-end AUM, decreased 31.0% to $38.9
million from $56.4 million for the nine months ended September 30,
2008.
Investment partnership revenues were $1.5 million, a decrease of $0.7
million or 31.8% from $2.2 million in 2008.
Our institutional research services subsidiary achieved revenues of
$12.2 million for the nine months ended September 30, 2009, up 10.9%
from the nine months ended September 30, 2008 amount of $11.0 million
reflecting an expanded client base attributable to increased sales and
trade execution as well as the success of our research product offerings.
Open-end fund distribution fees and other income were $15.8 million for
the nine months ended September 30, 2009, a decrease of $3.9 million, or
19.8% from the prior year nine month period of $19.7 million. The main
driver of this decrease was lower average assets in our open-end equity
funds that generate distribution fees.
Operating Income and Margin
Operating income before management fee was $19.5 million in the third
quarter 2009, 15.2% lower than the $23.0 million in the third quarter
2008. For the third quarter 2009, the operating margin before management
fee increased to 37.8%, versus 36.5% in the third quarter of 2008 and
33.1% in the second quarter of 2009. Attention to administrative
expenses contributed to the improved margin.
Operating income before management fee was $47.3 million for the nine
months ended September 30, 2009, 34.3% lower than the $72.0 million in
the comparable 2008 period. For the nine months ended September 30,
2009, the operating margin before management fee was 33.8%, versus 37.0%
for the nine months ended September 30, 2008.
At September 30, 2009, we had unearned incentive fee revenues of $16.7
million on the assets with incentive based fees representing $0.20 per
diluted share after direct expenses (compensation) and taxes. These
fees, which vary with the market value of the related AUM, are not
recorded as revenues until the contract period has ended, which for the
majority of these arrangements is December 31, 2009.
Other Income / (Expense)
Other income/(expense) (net of interest expense) was income of $7.0
million in the third quarter 2009 versus expense of $5.5 million in the
prior year's third quarter on improved investment income.
Other income/(expense) (net of interest expense) was income of $15.7
million in the first nine months of 2009 versus expense of $9.2 million
in the prior year's period on improved investment income.
Income Taxes
The effective tax rate for the third quarter 2009 was 37.4%, compared to
the 2008 quarter's effective rate of 24.4%. The prior quarter's reduced
rate was due to a reduction of income tax reserves.
The effective tax rate for the nine months ended September 30, 2009 was
35.3%, compared with the effective rate for the 2008 comparable period
of 35.1%.
Investment Highlights
The Gabelli ABC Fund Class AAA shares (GABCX) and the Gabelli
Enterprise Mergers and Acquisitions Fund Class A shares (EMAAX) were
named in a BusinessWeek article on July 30, 2009 highlighting
that an investment strategy focused on deal making is coming back.
The Gabelli & Company "Focus Five", a selection of five equity
securities every quarter for clients, including portfolio managers at
hedge funds and institutional investment firms, was the focus of a BusinessWeek
article on August 11, 2009. The article highlights how savvy stock
picking through research analysis still works.
Howard Ward, team leader of the GAMCO Growth strategy and the
portfolio manager of The GAMCO Growth Fund (GABGX) since 1994, was
highlighted in several magazines noting his experience in providing
alpha in up markets.
Morningstar rated 43% of the Class AAA share open-end funds that we
distribute five or four stars overall as of September 30, 2009.
On August 21, 2009, a Wall Street Journal SmartMoney Fund
Screen report titled 13 Small-Cap Funds on a Tear featured The
Gabelli Small Cap Growth Fund Class AAA shares (GABSX) among thirteen
small-cap equity funds using the following criteria: the funds must
first be beating the 2009 return of the S&P 500... performance track
records during the trailing three and five year periods that put each
fund in the top 10% of their respective categories¦do not charge a
sales load¦ a minimum investment under $5,000¦ open to new money...
charge less than a 1.5% expense ratio. Through September 30, 2009 the
1, 5 and 10 year total return for The Gabelli Small Cap Growth Fund
Class AAA shares was -1.70%, 6.25% and 9.08%, respectively. The
current expense ratio for The Gabelli Small Cap Growth Fund is 1.45%
for the Class AAA shares.
Past performance is no guarantee of future results. The
average annual returns and total returns shown above are historical and
reflect changes in share price, reinvested dividends and capital gains
and are net of expenses. Investment returns and the principal
value of an investment will fluctuate. When shares are redeemed,
they may be worth more or less than their original cost. As a
non-diversified fund, the Gabelli ABC Fund may have a larger portion of
its assets in a single issuer than a more diversified fund. Because
the fund invests in announced mergers and acquisitions, the Fund is
subject to the risk that the announced merger or acquisition may not be
completed, may be negotiated at a less attractive price, or may not
close on the expected date.
