With exposure across the market cap spectrum, and a disciplined proprietary value investment philosophy, the Gabelli Value Plus+ trust offers a differentiated investment solution and portfolio to a typical US equity vehicle. Using the proprietary Private Market Value with a Catalyst™ investment process that focuses on both the intrinsic value and strategic premium that a company offers a potential purchaser, the managers seek to identify companies which are trading on a substantial discount to the price which an informed buyer would pay for an entire business in a negotiated transaction. In addition to this, they seek to identify a catalyst(s) to realising this value, looking at a variety of factors or potential drivers of a rerating. These can be company specific or relate to the industry at large.
Historically, Gabelli’s forty plus years running this investment process has provided attractive downside protection characteristics whilst offering a relatively idiosyncratic returns profile. Whilst the trust itself has a relatively short track record, having only been launched in February 2015, Gabelli as a firm has been operating with the same investment philosophy since 1977, with annualised CAGR outperformance of c. 4% relative to the broad equity universe, using the S&P 500 as representative.
Since launch, the trust has generally demonstrated an ability to protect capital against market drawdowns. It has also shown a reasonable degree of correlation to value strategies, in line with the investment proposition.
The focus on bottom-up analysis often leads the team into stocks with low levels of broker coverage in the smaller cap areas of the market. Around 10% of the longterm portfolio has historically been invested in companies that eventually became the subject of takeover bids (consistent with the focus on evaluating the value of a company to its ‘Private Market Value’).
Whilst the portfolio is differentiated from the wider US market in any event, further differentiation is afforded with the option of investing a portion of the portfolio (currently around 10%) in merger-arbitrage opportunities, where companies are the subject of takeover bids and tend to trade just below the takeover offer value until consummation; returns from these opportunities are uncorrelated to wider market movements.
The trust focuses on total return rather than generating an income, so distributions are not guaranteed; income generation is likely to be a side-effect, rather than an aim of investment.