How to Manage Financial Incentives to Push Your Ideas Too Much

Today’s conversation is with the legendary Mario Gabelli, the Chairman and Chief Executive Officer of GAMCO Investors, Inc., the firm he founded in 1977. A 1965 summa cum laude graduate of Fordham University's College of Business Administration, he also holds an M.B.A. from Columbia Business School, and honorary doctorates from Fordham University and Roger Williams University.   Since starting his firm Mario has been called “a prophet in the wilderness” by Forbes and strongly believes that the small, neglected stocks are where the money is going to be made in the future. With a focus on strong research and flexibility, it’s this foundation that has allowed the fund to successfully generate returns for clients even when facing a headwind in the market.   From his management technique to his investment rationale, Mario shares his perspective and strategies for maintaining positive results in an ever-evolving marketplace. On this episode, we talk about how Mario started out as a researcher, the benefits of a niche research focus, why it’s so crucial to build accumulated knowledge in your industries of focus, how Mario identifies investment and growth opportunities, and so much more!   Key Topics:

• Mario shares how he first became interested in Graham and Dodd’s investing principles (2:45)
• The early career opportunities that steered Mario’s research focus (3:19)
• How Mario ended up starting his own firm at the bottom of a major economic downturn (4:27)
• The market response to Mario’s niche research focus at his firm (5:38)
• How the private market value and catalyst concepts came about (8:00)
• The important lesson Mario learned on a research trip to Toronto in 1977 (10:55)
• Why Mario uses a global approach to master the dynamics of change in an industry (12:53)
• Mario’s management techniques for working with super-specialized analysts (14:49)
• When did the Gabelli Asset Fund and the Gabelli Growth fund get started? (18:30)
• How Mario identifies and connects political and industry events with investment and growth opportunities (20:22)
• The approach Mario uses for managing clients and the firm’s positioning under difficult market conditions (24:39)
• Mario’s perspective on the effect of economic cycles in various industries (29:39)
• The factors behind the decision to invest talent and funds into specific industries while staying away from others (33:10)
• The changes that Mario expects to see in the business and economic models based on the current market activity and projections (36:07)
• Mario’s thoughts on the evolution of public markets (40:15)
• Why multiple sustainability is Mario’s biggest concern currently (42:59)
• Mario’s advice to people interested in starting companies (45:35)
• And much more!

 

Mentioned in this Episode:

• GAMCO Investors, Inc
• Barron’s Roundtables

  Thanks for Listening!   Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts.  And feel free to drop us a line at valueinvesting@gsb.columbia.edu   Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!