Listen to the ones who make money or listen to the idiots.Gabelli&Marisco.
Source:NBR 8/04/98
Interview: Thomas Marsico, Marsico Focus Fund
PAUL KANGAS: What's more important? A mutual fund with a good track record, or, a fund manager with a good track record. There is no clear answer, but investors who have stuck with Tom Marsico as their manager have certainly been rewarded. His new fund, the Marsico Focus Fund, racked up a return of more than 38 percent in the first seven months of this year. More than doubling the Standard & Poor's 500 return for the same period. Tom Marsico manages both that fund and the Marsico Growth & Income Fund at his own asset management firm in Denver where he joins us now. And welcome, Tom.
THOMAS MARSICO, PORTFOLIO MANAGER, MARSICO FOCUS FUND: Hi, Paul. How are you doing?
KANGAS: Let me get right to it. Was you fund badly hit by today's down turn?
MARSICO: You know, I imagine that our fund was down between 2 1/2 to 3 percent today.
KANGAS: Did you have a big increase in redemptions?
MARSICO: Frankly, Paul, today we had inflows into the Focus Fund and also into our Growth & Income Fund.
KANGAS: Interesting! Well, many of our viewers will remind you as a top performing, remember you as a top performing manager at Janus Funds. And I'm sure everyone wants to know, how do you manage to beat the Market so often, regardless of where you're working?
MARSICO: Paul, frankly, we believe it's the philosophy of a lot of diligent work. Great team work that we've put together in the group of people that I've assembled at the various place where I've worked, Janus, and then here at our own firm. But basically, we take a top down fundamental approach, and combine that with bottoms up individual stock selection. We try to marry those two philosophies together to produce good results.
KANGAS: What are some of the stocks in your relatively small portfolio right now?
MARSICO: Paul, we like Time Warner (NYSE:TWX), because it's the largest cable company in the industry. They've completed most of their capital expenditures to upgrade their cable plant to provide more television stations to their viewing public. Also, they're allowing telephony, telephone services, to take place over their cable systems, as well as Internet access. We also think that the rates that cable is getting should increase versus the networks which are declining as a portion of total ad revenues as viewership increases among the cable stations.
KANGAS: OK. Now, in-light of this recent weakness in the market, are you sitting tight or are you making some adjustments here?
MARSICO: Frankly, Paul, we have been adding to our positions in this environment. We believe that the fundamental outlook starting from the Federal government balance sheet, which is in tremendous surplus estimated to be about $66 billion. Also, 35 of the 50 states are in a budget surplus. Corporations are very flushed with cash. And individuals also have a very sound balance sheet. The balance sheets also in Europe are in relatively good shape as those countries prepare for EU. And the only place where there's a problem, of course, is in Japan.
KANGAS: OK.
MARSICO: But we believe that the officials over there will make the expedient decisions to improve the Japanese situation.
KANGAS: I'm going to have to make the decision to say, that's it for tonight, Tom. But thanks very much for being with us.
MARSICO: Thanks a lot, Paul.
KANGAS: My guest, Tom Marsico of Marsico Focus Fund.
MARSICO: Thank you.
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Fund Manager Mario Gabelli On Wall Street's Wild Ride
SUSIE GHARIB: So, what's next for the stock market. We're happy to have with us this evening, Mario Gabelli. He was named the number one money manager of the year in 1997 by MorningStar (NASDAQ:MSTR). He runs the wide ranging Gabelli Funds, and he tells me that before today, it had $16 billion under management. So, how do you think you made out today?
MARIO GABELLI, CIO, GABELLI FUNDS: Well, the market had a pullback, and ...
GHARIB: (LAUGHTER) And so did your fund.
GABELLI: And Mr. Market is allowing value investors, like ourselves, to buy things below their intrinsic value. This is what we look for. We like these kinds of situations.
GHARIB: You know, there are so many stock market analysts today who came out on changing their forecasts. And some bulls like Ralph Acampora calling this now a bear market. How bad is bad, Mario?
GABELLI: Well, those are the questions you have to ask. From a technical point of view, how bad is bad? What turns it around? What causes it to come down? What do we as investors look for? And how do we select and buy stocks...?
GHARIB: Are you going to answer these for us?
GABELLI: Well, of course. How bad is bad is a technical action. I don't know where that is. We look at earnings. We think corporate domestic earnings, not global. That is S&P 500 earnings are pretty good. The consumer, I think, will come through this unscathed. GM (NYSE:GM) is back to work. GM is going to add substantially to U.S. productivity and growth in the month of August. From the point of view of inflation and interest rates, I think Greenspan was worried about the financial bubble. Only 30 days ago, Susie, 30 days ago, Internet stocks - Lycos (NASDAQ:LCOS), Excite (NASDAQ:XCIT), Yahoo! (NASDAQ:YHOO) were all sizzling. And Greenspan had to worry. He doesn't worry as much today. Then we have the yen. Miyazawa has to do something, because if the yen goes to 150, the renminbi goes, the ruble goes, and then, what really impacts the United States is the real, that is Latin America. So we are sensitive to that. We think they'll act as good citizens. Can they act quickly enough? And that really is a driver.
GHARIB: So the short answer. Are you concerned? Is this a bear market?
GABELLI: I think that the market, having a 20 percent correction, is a non- event within the context of, you know, it's painful if you own it, if you haven't been through it, but you know, we've had Fasten Your Seat Belt signs on for awhile because Mr. Market was above its trend line. There was no margin of safety, Susie.
GHARIB: All right. You are a legendary value investor. So do you look at this now as a buying opportunity? Are you going to jump in tomorrow, and buy some more stocks?
GABELLI: Well, we always nibble at the margin about things we like, to the degree that Mr. Market, that is, the stock market and emotions dump stocks that we think are, you know, transaction-likely, we will buy them. For example, today, AMP (NYSE:AMP) was the subject of a lovemaking in a kind of a bear hug way, by a very motivated buyer, Allied (NYSE:ALD). That's going to put $10 billion back into the system. The stock was up 50 percent. It underscored that corporate buyers see the values, and what we like to do is figure out where they're going to go. So we're buying some telecom stocks. There's a lot of mergers. We like electrics and gas companies. We think that ...
GHARIB: Give us some names, in telecom, in electrics, what are you buying?
GABELLI: Well, in the telecom area, we think Frontier (NYSE:FRO) is likely to be taken over. We think the current management needs to marry up. They don't have scale. They don't have critical mass. And I think they're being a little stubborn in terms of turning down some of their overtures. The stock is around 30. We think we can get a fat premium over the current market price based on their virtues of assets.
GHARIB: What else?
GABELLI: Well, Telephone & Data Systems (TDA). I think their financial plan is dead-on-arrival. TDS if you're listening, your plan is DOA. You've got to come up with a new plan. Your stock is selling at $0.40 on the dollar to what your company is worth. And in the electrics, we like Eastern Fuel Enterprises (NYSE:EFU). We think Woody Ives is doing a great job. We think that MarketSpan (NYSE:MN) and Woody, that is, Brooklyn Union (BU), will all come together.
GHARIB: Real quickly, Mario. What's going to turn this whole market around, do you think?
GABELLI: A little, you've got, like a good storm, you've got to clean out the underbrush. Get some of the speculation out. And have the Japanese come to grips with their responsibility in the world. And have the American investor see that corporate profits are not going to hell in a handbasket.
GHARIB: Calling for just a little bit of a cleaning out. Well, that's a bit reassuring. Thanks a lot, Mario.
GABELLI: Well, a diuretic. Thank you.
GHARIB: Appreciate you coming by. It's been great having you here with us. Our special guest tonight, Mario Gabelli of the Gabelli Funds. |
