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To: Kelvin Taylor who wrote (40605)	6/13/2002 5:14:36 PM
From: Ron McKinnon	Respond to of 53068

gnss ah low that I saw was 8.80 stuck around 9 now about 500k vol ah

To: Kelvin Taylor who wrote (40605)	6/13/2002 10:14:32 PM
From: Larry S.	Read Replies (1) \| Respond to of 53068

Gabelli Thinks Some Investors May Be Buying Bait, Not Value By IAN MCDONALD THE WALL STREET JOURNAL ONLINE Mario Gabelli tries to buy shares of companies he thinks are trading for less than an acquirer would pay for them. He thinks you should do the same. Since the start of his investment career in 1967, the valuation principles laid out by Benjamin Graham and David Dodd in their seminal 1934 book "Security Analysis" have been the backbone of Mr. Gabelli's investing style. He looks for companies that he thinks are trading for less than they're worth and also have an unforeseen catalyst that could attract investors or a potential buyer. His approach has often lead to hefty stakes in telecommunications and media companies, areas that have been far from the market's sweet spot during the past two dismal years. Still, the $2 billion Gabelli Asset fund, which he has run since its 1986 launch tops the S&P 500 over the past one, three, five and ten years, according to Chicago researcher Morningstar. Today, Mr. Gabelli still favors media stocks and he thinks the worst may be over for some telecom outfits. He also thinks many investors are still ignoring a stock's expensive price tag or practicing "mindless investing." Is embattled conglomerate Tyco International a bargain or a trap? What big company is getting his attention these days and what should we do to make corporate management get their house in order? We got a few answers. 1. How do you value companies and are you asking different questions today than you were a few years ago? It's fairly simple. In a world where accounting standards are being challenged and the integrity of corporate management is being challenged and there's uncertainty, there's a compass for investors. It was published by Benjamin Graham and David Dodd in 1934 and it's called "Security Analysis." What we're doing today is a continuation of a method that has made sense for years. You basically read [a company's] annual reports, gather data, examine the data and project data. Then you come up with an intrinsic value for the enterprise and compare that with the public price. We introduced the concept that is private market-value analysis and the idea of looking for a catalyst, something unexpected that is positive for the enterprise. We haven't done anything differently over the past five years. 2. You traditionally have significant holdings in the media sector. Is that where your approach is leading you? We like the notion of a [company having a powerful] franchise or barrier to entry or another dynamic that lets you differentiate yourself. To run a TV station, for instance, you need a license and there are only so many licenses. And media companies are usually cash generators. On balance they're consumer-driven; Proctor & Gamble wants to sell more soap, so they need more ads. Given the regulatory environment, this is like the Oklahoma land rush. You'll see a lot of acquisitions in the area. As regulations change we continue to look at small TV groups, cable businesses like Rainbow Media Group and companies in the newspaper area like EW Scrippsthat could be combined with TV companies. Also, companies like Paxson Communications that have wonderful stations that people might want to own and Liberty which is a small TV operation someone might want to own. We also like companies in the auto parts business like Navistar [International] and vendors to the aerospace industry, particularly the defense area. 3. What's your worst-case scenario for telecom stocks from here? The worst case is here. Even the RBOCs [Regional Bell Operating Groups] like Verizon and British Telecom have been driven down to what we consider bargain basement prices. We're buying the Verizons of the world. We're also doing more research in wireless. The real surprise to me wasn't the bankruptcies of the Winstars or the Teligents or the problems of Global Crossing. The real shocker to me was Adelphia Communications where the basic business was terrific and management just stirred the pot the wrong way. 4. Several value managers have picked up shares of Tyco International during its most recent fall. Did you look at it? We have bought some. My take is that they will do the CIT [Group initial public] offering and there are some wonderful businesses [under Tyco's umbrella.] The stock price of $10 or $12 as I look today reflects many of the [company's] uncertainties. If they can get CIT sold and work on selling their plastics business, they will have answered many of the questions about their liquidity. It's not a big position though. Right now we're doing more work on [H.J.] Heinz [Co.]. [On Thursday, Heinz said it will spin off a number of its U.S. businesses, including StarKist tuna and 9-Lives cat food, and merge them with a reorganized Del Monte Foods Co. Heinz shareholders will own a 75% stake in the new company.] We think it's an example of very clever financial engineering. We're doing more work on that now. There are 400 people looking at Tyco, how many are looking at Heinz? 5. Are the excesses of the late 1990s washed out of the market yet? No. I think Omnicom [Group] showed there are still problems. [Omnicom shares fell sharply Wednesday following a story in The Wall Street Journal that raised questions about the advertising giant's accounting.] By the end of this summer any auditor or CEO will have his amnesty, but it's not over yet. You haven't asked me about corporate governance. 6. After the tech bubble, Enron's collapse and the accounting scandals we've seen, what do you have to say on the issue? [Stock] options were the cocaine of corporate America and momentum investing was the cocaine of the fund business. Money flowed in to mindless investments under the guise of indexing or [investing in] technology. Mindless investing continues to be a problem. Selling the latest fad is still a fad. Fundamental research still needs to be done by investors and Wall Street needs to get back to basics. Accountants shouldn't be in the business of providing services along with their auditing. Brokers shouldn't be in the money management business....Companies shouldn't have poison pills [covenants designed to stave off takeovers] and if they do they should be voted on each year. 7. What's the biggest mistake an investor could make today? Same as always, momentum investing or just buying what's going up. Not picking up a book on value investing.