Heard on the
column, John Jannarone declares that
's Star Power Fades," and looks at Gamco Investors
' profits (comparing them those with Waddell & Reed
and Franklin Resources
), AUM growth and Gabelli's pay.
Jannarone notes that since the beginning of 2003, Gamco's earnings went up only five percent, to $56 million in 2009.
By comparison, Waddell & Reed, which operates the Ivy Funds
, saw net income jump 21 percent and Franklin Resources chalked up a 107 percent surge in earnings. The article, however, makes these comparisons without discussing the three firms' business models and investment mix.
Jannarone also points to "sluggish growth" in Gamco's AUM
(24 percent over
the seven-year period). On the other hand, Waddell and Franklin both saw their AUM more than double during that period. The article, though, does not delve into why this is the case.
As fundsters as well aware, fund flows often go toward funds that have good performance. There's one mutual fund mentioned in the article: Gabelli Asset AAA, which bested 95 percent of its peers in the past 10 years. However, Jannarone does not mention whether
AUM is up or down for that fund.
As for the pay issue, the article goes both ways.
Jannarone also notes that Gabelli's pay has weighed on earnings. The 67-year-old Gabelli, one of the highest paid fund executives, received $46 million in cash compensation in 2008, the year that
Gamco's AUM declined by a third and its net income was $25 million.
But it also notes how important Gabelli is to the business: "Mr. Gabelli, 67 years old, will be an active manager only for so long. Any would-be acquirer would have to consider how the business would look without him," Jannarone writes.
Armie Margaret Lee
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