Mario Gabelli: "Activism - New Catalyst to Surface Value... Good or Bad?" - Notes

I attended an enjoyable luncheon today titled "Activism - New Catalyst to Surface Value... Good or Bad" with Mario Gabelli, Founder, CEO, and PM for the value strategies at GAMCO (GBL), he's as talented of a speaker as he is a value investor.  Here are some short form notes I took and wanted to document:

• Gabelli manages the Gabelli Asset Fund, a $3.8 billion dollar five star fund with an amazingly low 6% turnover ratio, he mentioned several names that he's held for over 20 years
• He's a believer in "POSP" or Plain Old Stock Picking, he researches one stock, one industry at a time and doesn't spend a lot of time worrying about economic indicators (showed a cartoon of an analyst flipping a coin) or overvalued sectors like biotech or social media - I particularly liked this point and its how I try to approach investing, it's fun to discuss where we are in the economic cycle, but I don't think there are many people smart enough to consistently exploit it
• Shareholders own the company; think like an owner
• In 1988, he posted a "Magna Carta of Shareholder Rights" and still stands by it today:

• He's fiercely against poison pills and actively works to remove them, compared the poison pill to the Berlin Wall and management trying to keep the shareholders out, entrenching themselves
• Wants short sellers to disclose their holdings, same with distressed debt buyers attempting to gain control of a company going through a restructuring
• He looks for companies trading below private market value that have a catalyst in place to close the gap, he's recently added activism to his list of potential catalysts alongside (1) regulatory changes; (2) industry consolidation; (3) death of founder; (4) stock repurchases; (5) sale of a division; and (6) management or capital succession
• Activism is a net benefit to shareholders
• Large inflows in recent years at activist funds, lots of OPM (Other People's Money) to play with
• Be aware of activist fund intentions, the 2&20 fee structure encourages activism, need for a big quick win, good for publicity to raise assets
• Lots of special situations as a result of activism (spinoffs, splitoffs, mergers, and liquidations), went through a few local Chicago examples like Fortune Brands and Kraft
• During the Q&A he dropped a quick stock pitch for GATX Corporation (GATX), a railcar lease company that should earn 12 or 13% CAGR over the next decade
• Also likes content and media companies, been on TV recently discussing Twenty-First Century Fox (FOXA) and others

He's an active alumnus of the Columbia Business School (interviewed in the Fall '11 copy of Graham and Doddsville), good to get a little Dodd/Graham philosophy reminder every now and then.