Barbara Novick, achive photo. vicepresidenta y cofundadora de BlackRock
Barbara Novick, BlackRock’s Vice Chairman and Co-Founder will step down from her day-to-day duties at the asset manager, according to an internal memo cited by various news outlets.
Novick, 59, will continue in her current role until her successor is chosen, a process she will help with and after which, she will serve as a senior adviser to the company.
“Much of the post-financial crisis policy work that Barbara led is largely implemented, and she has greatly enhanced our stewardship practices, including our commitment to transparency”, Chief Executive Officer Larry Fink said in the memo.
Barbara G. Novick, Vice Chairman, is a member of BlackRock’s Global Executive Committee, Corporate Risk Committee and Global Operating Committee. From the inception of the firm in 1988 to 2008, Novick headed the Global Client Group and oversaw global business development, marketing and client service across equity, fixed income, liquidity, alternative investment and real estate products for institutional and individual investors and their intermediaries worldwide.
In her current role, she oversees the firm’s efforts globally for public policy and for investment stewardship. In addition, she is a member of the Executive Committee of the Investment Company Institute.
Prior to founding BlackRock in 1988, Novick was a Vice President in the Mortgage Products Group at The First Boston Corporation. She joined First Boston in 1985 where she became head of the Portfolio Products Team. From 1982 to 1985, Novick was with Morgan Stanley.
Novick has authored numerous articles on asset management and public policy issues.
Alesandro Agnore has joined Unicorn Strategic Partners‘ sales team in Miami.
As Funds Society found out, Agnone joined the team last Monday and has more than 15 years of experience in companies such as Merrill Lynch, Wells Fargo and Jefferies.
David Ayastuy, Managing Partner and Founder of Unicorn SP said: “Our goal is to continue investing in talent and to grow as much as the industry allows. We have strategies from the two managers that we represent for US offshore (BNY Mellon and Vontobel) that perfectly complement the different needs of customers and market situations. If the results continue to accompany us, the idea is to continue growing the team, and by the end of 2020 have a person based in Houston that covers Texas and West Coast, as well as an Internal Wholesaler in New York, where Mike Kearns, Head of US Offshore, is based.”
Unicorn SP currently has a team of 10 people, 6 of them based in the United States (in New York and Miami), and the rest in Latin America. In addition to BNY Mellon and Vontobel, the firm also represents Muzinich and as of a month ago, French boutique La Financiere de L’Echiquier.
Marysol Novo-Capello, courtesy photo. Marysol Novo-Capello se une a AXA Investment Managers
In an effort to strengthen its growing Americas Client Group, AXA Investment Managers has hired Marysol Novo-Capello as Key Account Manager.
Marysol will be based in Greenwich, CT and will report to Marcello Arona, Head of AXA IM Inc. and CEO of AXA IM in the Americas.
Marysol will focus on onboarding new investors and distributors, including wirehouses, independent broker-dealers, RIAs and regional private banks. Working with AXA IM’s sales & client services and operations team, she will also develop operational infrastructure and procedures to support expanding partnerships with offshore clients.
She was most recently with Morgan Stanley Wealth Management, where she successfully supported the development of the firm’s offshore fund business.
Latin American wealth and institutional investors are increasingly looking for alternative exposure according to Roque Calleja, Head of BlackRock Alternative Specialists (BAS) for Latin America.
In an interview with Funds Society, the specialist mentioned that BlackRock, as a local player across LatAm, has been able to identify this increase in demand from public to private exposure, and that along with his team, they are “uniquely positioned to deliver.”
The alternative space is one of BlackRock’s three focus growth areas, along with the iShares platform and technology. They currently manage aprox $200bn dollars across their global alternative solutions. Over the past few years, BlackRock has been building their alternatives investment platform as well as augmenting their existing credentials with additional capabilities
With the acquisition of eFront from private-equity firm Bridgepoint for $1.3 billion in cash last year, Roque expects that towards the end of 2020, the company will be able to integrate this amazing private market tool with their very much-established Aladdin, setting a new standard in investment and risk management technology, vastly expanding Aladdin’s alternatives capabilities and providing a whole-portfolio technology solution to clients. Their goal is “to be able to look through the entire portfolio, across public and private exposures.” Which will aid them in their endeavor of providing outcome-oriented solutions to clients.
“Our view is that today we are the only investment manager that can provide access to best in class capabilities across both the liquid and illiquid spectrum. Furthermore, we are the only manager that can fully model the total portfolio view to ensure we have clarity about the risks you are taking. We are uniquely positionedto build “Tomorrow’s Alternatives Platform” and be the alternatives provider of choice for our clients.”
In Calleja’s opinion the tilt towards private investments follows investor’s search for “returns and diversifications and specially in LatAm they are looking for income.”
Very diversified across asset classes
Calleja mentions that they have “a very diversified platform across all the different asset classes in alternatives, with the full spectrum of solutions for clients.” In Latin America, he mentions that when clients invest in alternatives, there has been historically a strong bias in private equity “since they are looking for the highest returns. Now however, across wealth and instructional portfolios alternatives are becoming a larger part of the portfolios and clients are looking into more diversified exposures. And with that, there is a huge demand for alternatives in the region, in both liquid and illiquid solutions… We see a lot of demand for private equity, real assets but also for private debt and others. Now you see it across the board, clients looking more holistically to have exposure to alternatives.”
Because of this, BlackRock is looking to democratize the asset class to give better access to clients. “We need to be more creative about how to bring illiquid solutions across the region and we are looking on new strategies for the wealth space, for distributors, family offices etc…”
In his opinion, one of their main differentiators is that, with three people in NYC and one in Peru, they have a dedicated team to cover the asset class in the region and that is “not about pushing product but helping clients in the transition of having a diversified exposure across public and private exposures’
“We give investors new choices and better value as they build alternatives allocations that match their specific needs...” He mentions
“As we are entering a ‘New Era of Alternatives’ deal sourcing is more important than ever – years ago you could have probably worked with any alts provider, but in this era, you want to have access to the widest and deepest global sourcing network that makes alts work for you, and BlackRock is truly different from any other alternatives player.” He concludes.
During the first edition of Funds Society’s Investments & Rodeo Summit, which will take place on March 5, 2020 at the Intercontinental Houston Medical Center, Bradley George, Managing Director in the US Institutional team at Investec Asset Management will talk about quality investing, and seeking long-term outperformance from strong franchises.
“Investec Asset Management believes that investing in Quality companies can provide greater certainty in the uncertain markets we are currently faced with. Investec’s Quality approach is to look for companies which typically have high customer loyalty, strong brands and low debt. These companies have historically proved more resilient in times of economic uncertainty.” They mention.
During the presentation, George, will discuss Investec’s rigorous research process and how there are not many companies which meet Investec’s exacting requirements. Bradley will also provide an overview of the strategies’ global portfolios showing how they are currently positioned.
Bradley joined Investec Asset Management in 2006 as the Head of Commodities & Resources. He joined the firm after spending seven years at Goldman Sachs where he worked as an executive director in the Commodity Division. Prior to this, he worked in the Goldman Sachs Investment Banking Division on natural resources M&A transactions in both London and South Africa. Previously, he spent three years at KPMG in the Financial Services Division within the Treasury Advisory Group, offering clients consultancy advice on financial derivatives risk management. Bradley graduated from the University of Cape Town with an honours degree in Business Science in 1994. He completed his postgraduate diploma in Accounting (PGDA) from the University of Cape Town in 1995. In 1998 he was awarded the Chartered Accountant designation (SA).
Richard Garland, Managing Director, and Fernando Penaloza, Sales Director, will also be present at the event.
If you are involved in the management of fund portfolios, or the selection and analysis of funds, and want to participate in this event, reserve your place as soon as possible by writing to info@fundssociety.com.
Investec Asset Management, soon-to-be Ninety One, is a specialist investment manager, providing a premier range of products to institutional and individual investors. Employees are equity stakeholders in the firm. Established in 1991, the firm has been built from a small start-up into an international business managing US$ 148.9bn. They have grown from domestic roots in Southern Africa and the UK to a position where they proudly serve a growing international client base from the Americas, Europe, Asia, Australia, the Middle East and Africa. The firm seeks to create a profitable partnership between clients, shareholders and employees, and to exceed clients’ performance and service expectations. Investec Asset Management is a significant component and independently managed entity within the Investec Group, which is listed in London and Johannesburg.
Jenny Johnson, President and CEO at Franklin Templeton, courtesy photo. Jenny Johnson, President and CEO at Franklin Templeton
Franklin Resources, a global investment management organization operating as Franklin Templeton, announced on February 18th that it has entered into a definitive agreement to acquire Legg Mason, for $50.00 per share of common stock in an all-cash transaction. The Company will also assume approximately $2 billion of Legg Mason’s outstanding debt. The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage over $806 billion in assets as of January 31, 2020, will establish Franklin Templeton as one of the world’s largest independent, specialized global investment managers with a combined $1.5 trillion in assets under management (AUM) across one of the broadest ranges of high-quality investment teams in the industry. The combined footprint of the organization will significantly deepen Franklin Templeton’s presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client AUM. In addition, the combined platform creates a strong separately managed account business.
“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” said Greg Johnson, executive chairman of the Board of Franklin Resources, Inc. “Our complementary strengths will enhance our strategic positioning and long-term growth potential, while also delivering on our goal of creating a more balanced and diversified organization that is competitively positioned to serve more clients in more places.”
Jenny Johnson, president and CEO of Franklin Templeton, said, “This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives. We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”
Joseph A. Sullivan, chairman and CEO of Legg Mason, said, “The incredibly strong fit between our two organizations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment. By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption. Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination.”
Carol Anthony “John” Davidson, lead independent director of Legg Mason, said, “Today’s announcement marks the beginning of an exciting next chapter for Legg Mason, our investment affiliates and valued clients, who will benefit from a leading global asset manager with the scale to compete and win in today’s markets. I am honored to have had the opportunity to serve as the lead independent director of this dynamic board, and I am truly appreciative of the hard work and dedication of the entire Legg Mason team.”
Nelson Peltz, CEO and Founding Partner of Trian Fund Management, and a Legg Mason director said, “Given the dynamics of today’s rapidly evolving and increasingly competitive asset management sector, I believe this transaction is compelling. In our view, it offers an attractive valuation for Legg Mason’s shareholders. I believe it will also enable Legg Mason’s investment affiliates to remain at the forefront of an industry where scale is increasingly vital to success and to join Franklin Templeton, an organization that I have deep respect for and confidence in.”
Trian Fund Management, L.P. and funds managed by it, which collectively own approximately 4 million shares or 4.5% of the outstanding stock of Legg Mason, have entered into a voting agreement in support of the transaction.
Jenny Johnson added, “This transaction gives us significant scale, addresses strategic gaps and brings greater balance to our business, while positioning us for accelerated growth in the future. We have incredible respect and admiration for the success Legg Mason and its investment affiliates have achieved and we have structured the transaction to ensure that its affiliates have the right mix of independence and support to continue building on their strong track records. Legg Mason’s investment affiliates will be able to leverage Franklin Templeton’s global infrastructure and ongoing investment in technology and innovation, while clients can take comfort in the combined firm’s financial strength and aligned interests.”
Continued Autonomy for Investment Affiliates
Franklin Templeton has spent significant time with the affiliates and there is strong alignment among all parties in this transaction and shared excitement about the future of the company.
James W. Hirschmann, CEO of Western Asset, a Legg Mason affiliate, said, “Western Asset is excited to be joining the Franklin Templeton family, a firm with a long and storied history of proven financial performance and a leadership team and board with decades of asset management experience who value our investment independence and organizational autonomy. Like us, Franklin Templeton understands the importance of culture, teams and core values to achieving outstanding investment results for clients.”
Terrence J. Murphy, CEO of ClearBridge Investments, a Legg Mason affiliate, said, “As part of Franklin Templeton, we are confident that we will retain the strong culture that has defined our success as a recognized market leader in active equities. Their commitment to investment autonomy, augmented by the scale and reach that the combined organization will provide, will allow us to deliver for our existing clients and expand our ability to deliver our investment capabilities in new channels and regions. We are very pleased to join the team at Franklin Templeton and excited about what we can do together.”
Organizational Structure and Parent Company Integration
With this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged. As with any acquisition, the pending integration of Legg Mason’s parent company into Franklin Templeton’s, including the global distribution operations at the parent company level, will take time and only commence after careful and deliberate consideration.
Following the closing of the transaction, Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue to serve as executive chairman of the Board of Franklin Resources, Inc. There will be no changes to the senior management teams of Legg Mason’s investment affiliates. Global headquarters will remain in San Mateo, CA and the combined firm will operate as Franklin Templeton.
After careful consideration, EnTrust Global, a Legg Mason affiliate that provides alternative investment solutions, and Franklin Templeton, jointly agreed that it was in their best interest that EnTrust repurchase its business, which will be acquired by its management at closing. EnTrust will maintain an ongoing relationship with Franklin Templeton. Jenny Johnson added, “EnTrust is an excellent business and we recognize and appreciate their desire to once again become a private company. We have appreciated their collaboration in our discussions and look forward to our ongoing relationship.”
Transaction Details
The all-cash consideration of $4.5 billion will be funded from the Company’s existing balance sheet cash. Franklin Templeton will also assume approximately $2 billion in Legg Mason’s outstanding debt. Upon closing of the transaction, Franklin Templeton expects to maintain a robust balance sheet and considerable financial flexibility with pro forma gross debt of approximately $2.7 billion with remaining cash and investments of approximately $5.3 billion. This transaction is designed to preserve the Company’s financial strength and stability with modest leverage, significant liquidity and strong cash flow to provide ongoing flexibility to invest in further growth and innovation.
This transaction is expected to generate upper twenties percentage GAAP EPS accretion in Fiscal 2021 (based on street consensus earnings estimates for each company), excluding one-time charges, non-recurring and acquisition related expenses.
While cost synergies have not been a strategic driver of the transaction, there are opportunities to realize efficiencies through parent company rationalization and global distribution optimization. These are expected to result in approximately $200 million in annual cost savings, net of significant growth investments Franklin Templeton expects to make in the combined business and in addition to Legg
Mason’s previously announced cost savings. The majority of these savings are expected to be realized within a year, following the close of the transaction, with the remaining synergies being realized over the next one to two years.
The transaction has been unanimously approved by the boards of Franklin Resources, Inc. and Legg Mason, Inc. This transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and approval by Legg Mason’s shareholders, and is expected to close no later than the third calendar quarter of 2020.
Broadhaven Capital Partners, LLC and Morgan Stanley & Co LLC served as financial advisors to Franklin Resources, Inc. Ardea Partners LP also provided advice. Willkie Farr & Gallagher LLP acted as external legal counsel. PJT Partners served as the lead financial advisor to Legg Mason. J.P. Morgan Securities LLC also served as financial advisor to Legg Mason. Weil, Gotshal & Manges LLP served as lead counsel to Legg Mason and Skadden, Arps, Slate, Meagher & Flom LLP served as special counsel to Legg Mason. Dechert LLP served as legal counsel to EnTrust Global.
Pixabay CC0 Public Domain. Jupiter Fund Manager compra Merian Global Investors por 469 millones de euros
Jupiter Fund Management is to acquire Merian Global Investors for £370 million ($476.5 million), in a deal that will boost its fixed-income and emerging markets capabilities.
A jointnews release said the deal, which is expected to complete July 1, will add £22.4 billion to Jupiter’s AUM, for a combined assets under management of £65.2 billion.
The 100% acquisition will be financed through the issue of new Jupiter shares to Merian shareholders. Following completion of the deal Merian’s largest shareholder, TA Associates Management, will own about 16% of the enlarged firm and key Merian management will own about 1%.
The deal is subject to Jupiter shareholder and regulatory approval. Once completed, the firm will operate as Jupiter.
Merian’s investment team will join Jupiter, according to the release.
“The addition of Merian is compelling for all stakeholders. With this acquisition, our business will benefit from an increased capacity to attract, develop and retain high quality talent, backed by further investment in our platform and technology. In turn, we will be able to offer a wider choice of strongly performing active investment strategies to our clients, while shareholders will benefit from a highly earnings accretive deal delivered through substantial cost synergies,” Andrew Formica, CEO of Jupiter, said in the news release.
Mark Gregory, CEO of Merian, added: “Jupiter is a great strategic and cultural fit with our business. It has a market leading brand with a clear focus on high conviction, active asset management which is entirely consistent with our own. I believe the enlarged business will be more strongly positioned to offer greater choice and investment performance to clients and continue to meet clients’ ever-evolving needs.”
Pixabay CC0 Public Domain. ¿Existe la posibilidad de un escenario ‘melt-up’ en los mercados estadounidenses?
In an article published in March 2019, we described the possibility of a melt-up scenario if world central banks were to have a heavy hand on their asset purchases and liquidity injections. A melt-up could be characterized by too much liquidity chasing too few investable assets, thereby leading to sharp upward movements in the prices of stocks and bonds. Such an outcome would most probably impact primarily the assets of leading US companies (an integral part of the main US financial indices).
Back then, this eventuality seemed unlikely in light of the restrictive monetary policy carried out by the Fed. This institution was reducing its balance sheet, by withdrawing the liquidity it had made available during its asset purchase or ‘Quantitative Easing’ (QE) programs 1, 2 and 3. This monetary constraint coupled with the interest rate hikes of 2018 made the melt-up scenario a very distant possibility.
However, since March 2019, the Fed’s monetary policy has been completely reversed. This has led to a significant increase in asset prices. Three interest rate reductions, massive liquidity injections in the US Repo market, sprinkled with a dose Treasury bond purchases (not to be called QE4) have all gone a long way to reassure the financial world, unsettled by events barely a year earlier. In addition, investors, sidelined by the Fed’s 2016 to 2018 monetary policy, have started to come back and buy US assets.
To add to this monetary policy reversal, the financial health of large American corporations has contributed to the rise in US markets. Stock prices have been driven higher on the back of generous dividend payouts as well as share buy backs, sometimes both. Furthermore, cash rich corporations have lowered their external borrowing needs, thereby reducing their bond footprint in capital markets. The dwindling quantity of stock and bonds of American bluechips, faced with strong investor demand, explains in part their positive performance in 2019. This also bodes well for their potential upward price progression moving forward.
One potential ‘cloud on the horizon’ which could upset US financial markets in the future is the significant federal deficit situation. This is just adding to the nation’s colossal debt pool year after year. In spite of this, the appetite for US Treasuries still remains strong.
Why is that? Aside from the Fed’s current asset purchase program, one explanation is the lack of sovereign debt elsewhere in the world, which is driving international investors to US Treasuries. The European Central Bank (ECB) for example owns 40% of Eurozone sovereign bonds. This institution is mechanically driving out its own local investors (who need to hold government bonds) to seek them elsewhere in the world. In Japan, the situation is even worse.
Another reason relates to the negative interest rate policy being applied in Europe and Japan. Capital from these regions is desperately seeking positive returns. The opportunity of investing in the United States on any US Dollar asset including government debt is increasingly being chosen. US capital markets are therefore being supported from international capital flows coming from abroad.
The recent rise in US markets can be attributed to the change in the Fed’s monetary policy, the economic health of large US corporations, as well as incoming capital flows from overseas. What could then be said about the possibility of a melt-up scenario?
As the world’s reserve currency, the US Dollar has a very specific advantage. It remains the safe haven place to go to when faced with significant world uncertainty. On top of this, US equity and bond markets are the only financial markets deep enough to accommodate a large portion of international savings. (Traditional safe havens such as Gold or the Swiss Francs are far too small to absorb these potential capital flows).
If ever the world was exposed to significant geopolitical, health, or financial risks, then a craze could appear from world investors to acquire US Dollar currency and assets. In such a scenario, the melt-up could become much more than a hypothetical possibility.
Column by Steven Groslin, Executive Board Member and Portfolio Manager at ASG Capital
Didier Saint-Georges, Member of the Strategic Investment Committee and Managing Director at Carmignac, will talk about their unconstrained approach in Fixed Income Markets during the first edition of Funds Society’s Investments & Rodeo Summit, which will take place on March 5, 2020 at the Intercontinental Houston Medical Center.
“Our Unconstrained range is defined by an active and global investment approach, that relies on great flexibility in managing exposures through a non-benchmarked philosophy. Thus, Unconstrained Fixed Income Funds may be suitable for investors seeking higher yields outside Europe, which is undergoing historical financial repression, since it aims to benefit from both rising and declining rates and to seize bottom-up opportunities through our disciplined risk management framework.” He mentions.
Didier joined Carmignac in 2007 and he is since 2018 a member of the Strategic Investment Committee. He started his career in 1983 in aircraft financing at Citibank, before moving to the securities business in 1987. He spent ten years with JP Morgan in London, Paris and New-York, where he set up and ran the international equity department. In 1997, he took on the role of Managing Director at Merrill Lynch, in charge of the Global equities and derivatives activities in Paris. Didier graduated from Ecole Supérieure de Commerce de Paris (ESCP) and holds a MBA degree from Georgia State University. He is also the author of two books – “Peut-on battre le marché?” and “Le libéralisme est une chose morale”.
Charlotte Samson, Head of US Offshore & Latam at Carmignac, and David O´Suilleabhain, its Business Development Manager, will also be present at the event.
If you are involved in the management of fund portfolios, or the selection and analysis of funds, and want to participate in this event, reserve your place as soon as possible by writing to info@fundssociety.com.
About Carmignac
The firm has had more than 30 years of independence and conviction
Founded in 1989 by Edouard Carmignac, Carmignac is one of the leading asset managers in Europe today. Carmignac is owned entirely by its managers and staff. In this way, the company’s long-term viability is ensured by a stable shareholding structure, reflecting its spirit of independence. This fundamental value ensures the freedom required for a successful and renowned portfolio management. Carmignac offers a focused range of global, specialized or diversified Funds.
The U.S. stock market rallied into the third week of January then dropped sharply at month end as fears that the spreading coronavirus (nCoV) would reduce growth in China and eventually other countries. U.S. stocks closed flat for the month while Chinese markets were closed for the final week of the Lunar New Year. Earnings releases are in full swing and the U.K. has left the EU. The world waits.
Our firm’s research theme for the next decade is saving Planet Earth, helping people and creating potential…saving the planet by reducing/eliminating plastic and focusing on the impact of climate change and on companies that are finding new solutions. Renewables, including wind, solar, battery storage and building infrastructure for transmission are the areas we want represented by some portfolio companies.
One of the Gabelli stock ‘picks’ in BARRON’s 2020 Roundtable Part 3 published in the January 27 issue that is directly impacting climate change is Orange, Connecticut based sustainable energy company Avangrid Inc. (AGR). AGR has a regulated utility business with a growing $10 billion rate base that provides a tailwind to earnings and a rising dividend.
The second part of AGR is the Avangrid Renewables business, a major factor in solar and wind that owns and operates a portfolio of renewable energy generation facilities across America. In December, Connecticut awarded an Avangard partnership a 20-year contract to provide 14% of the state’s electricity with renewable energy. Spanish utility Iberdrola (IBE), owns over 250 million of the 310 million AGR shares outstanding and is a potential catalyst for an M&A deal.
Another Gabelli BARRON’S ‘pick’ is clean energy project operator NextEra Energy Partners (NEP), which is also an attractive opportunity in renewables.
We feel there should be a greater need for companies to allocate capital in the new year, as opportunities present themselves, there will be a headwind for more deal activity.
Column by Gabelli Funds, written by Michael Gabelli
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To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
GAMCO MERGER ARBITRAGE
GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.
Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.
Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.
Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.
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GAMCO ALL CAP VALUE
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GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise. The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach: free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.
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Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.
