Investors can now access Malone’s savvy via an ETF
Omaha may have Warren Buffett, but Douglas County has John Malone, who now joins the pantheon of investment personalities large enough to merit an investment fund to track their financial moves.
Gabelli Funds on Thursday is launching a new exchange-traded fund, or ETF, called the Gabelli Media Mogul NextShares that will invest in the companies that Malone or his Liberty Media Group deputies have started, have spun off or are investing in directly.
“I am often asked by clients which of the Liberty companies we should buy,” said Chris Marangi, portfolio manager of the new fund, which carries the ticker MOGLC.
The answer he came up with is to buy a basket of them, using the Gabelli’s value approach of finding the best bargains and holding them for the long haul.
The new fund will price daily and start trading at $10 a share, about a third of the
$31.29 per share that Liberty Media Group’s stock closed at on Wednesday.
The Liberty universe isn’t huge in numbers — about 32 stocks — and concentrated primarily in cable and media. But those companies represent $340 billion in market value and include Charter Communications, Discovery Communications and Liberty Global.
The new fund will invest primarily in stocks but has the flexibility to invest in Liberty-related bond issues and to hedge when it sees opportunities.
For example, Marangi said sometimes the shares of the companies that Malone invests in trade at a premium to the tracking stocks that hold those investments, creating an arbitrage opportunity.
Gabelli has followed Malone for four decades, going back to the days of TeleCommunications Inc., the predecessor of Liberty Media, Marangi said.
Malone has a reputation for finding bargain investments and unlocking their value in a tax-efficient way. Part of that strategy has involved spinning off company after company, which in turn has required employing a cadre of executives trained in his approach.
“One of the less-appreciated elements to John’s success has been his ability to attract and retain top talent,” Marangi said. That makes it more likely those who follow him will be able to replicate Malone’s investment success.
Alex Bryan, Morningstar’s director of ETF research in North America, said most exchange-traded funds passively track an index of some type. In offering both active management and a very focused investment niche, Gabelli is providing a novelty investment product.
“When you see really niche products, they are hoping they are in the right place in the right time,” he said.