In­vestors can now ac­cess Malone’s savvy via an ETF

The Denver Post - - BUSINESS - By Aldo Svaldi

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.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.