Mario Gabelli's Gabelli Value 25 Fund 2nd-Quarter Commentary: A Review

INVESTMENT SCORECARD

The single largest contributor to second quarter returns was gold miner Newmont Corp. (NEM, Financial) (5.3%, +18%) which followed a rally in gold to over $2,400 per ounce based on geopolitical uncertainty and aggressive Chinese, Indian, and Russia buying, in part to hedge a falling dollar. Long-time holding UScellular (1.8%, +53%), along with its 83% owner Telephone & Data Systems (TDS, Financial) (1.0, +30%), finally announced the sale of its wireless customers and a portion of its spectrum to T-Mobile (TMUS, Financial) for $4.4 billion; USM's remaining assets, including its tower portfolio, partnership stakes, and additional spectrum are likely worth at least as much as its cellular business, and could also be monetized in the near term. Crane Company (CR, Financial) (4.4%, +7%) also contributed as defense-related assets stand to do well under either political party. The largest detractor from performance was Paramount Global (PARAA, Financial) (4.3%, -16%) after controlling shareholder Shari Redstone appeared to reject an approach by Skydance Media, a diversified studio backed by the Ellison family and RedBird Capital. In early July, Redstone announced she had agreed to sell her controlling stake to Skydance, and that Skydance would tender for additional shares of the company and sell its existing business to Paramount. The transaction remains subject to a go-shop period and potential litigation. Other Q2 detractors included Sphere Entertainment (SPHR, Financial) (0.9%, -29%), which gave back early year gains after successfully opening its iconic Las Vegas venue in late 2023, and CNH Industrial (CNH, Financial) (1.2%, -1.9%), where the overhang of lower crop prices could impact the ability of farmers to purchase the company's tractors.

LET'S TALK STOCKS

Bank of New York Mellon Corp. (BK, Financial) (5.3% of net assets as of June 30, 2024) (BK – $60.11 – NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in more than one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of June 30, the firm had $49.5 trillion in assets under custody and $2.0 trillion in assets under management. Going forward, BK is benefitting from higher interest rates, rising global incomes, and the cross border movement of financial transactions.

Crane Co. (CR, Financial) (4.4%) (CR – $143.03 – NYSE), based in Stamford, Connecticut, is a diversified manufacturer of highly engineered industrial products comprised of three business segments: Aerospace & Electronics, Process Flow Technologies, and Engineered Materials. In April 2023, the company separated into two independent companies in which the Payment and Merchandising Technologies business became “Crane NXT” and the Aerospace & Electronics and Process Flow Technologies business retained the Crane Co. name. Crane's long term vision is build two strategic growth platforms with Aerospace & Electronics and Process Flow Technologies focusing on building both of those businesses to $2 billion each in revenue with 20%+ adjusted EBITDA margins by 2028.

Madison Square Garden Sports Co. (MSGS, Financial) (5.0%) (MSGS – $192.40 – NYSE), owner of the New York Knicks basketball team and the New York Rangers hockey team, is one the few ways for the public to access the positive dynamics of sports franchises. The company's predecessor was spun-off from Cablevision in 2010 and subsequently separated its venue and entertainment businesses. Team values have appreciated significantly as they represent excellent stores of value in an inflationary environment; basketball in particular has significant global growth potential. The Knicks on-court has also improved with a core of young players and significant draft capital that should engender additional fan engagement and create incremental pricing power in future years.

National Fuel Gas Co. (NFG, Financial) (3.9%) (NFG – $54.21 – NYSE), based in Williamsville, New York, is a gas and pipeline utility with a growing exploration and production business. The gas utility serves 754,000 customers in Buffalo, NY and Erie and Sharon, PA. The pipeline & storage (P&S) business operates 3,000 miles of pipe and 34 storage facilities primarily in the state of New York. The E&P business, Seneca Resources, operates in Appalachia (owns 1.2 million net acres), primarily the Marcellus and Utica shales. Seneca's proved gas reserves at year-end FY 2023 were 4,536 Bcfe (compared to 4,172 Bcfe in FY 2022). The potential for higher long-term gas prices due to LNG exports and growing electric power demand increase the potential for the significant value of the 1.2 million net Marcellus/Utica acreage to be realized. The company continues to transition to a maintenance/low growth mode and free cash flows to improve credit profile and overall financial strength. NFG raised the annual dividend for the 54th consecutive year to $2.06 per share, from $1.98 per share.

Paramount Global (4.3%) (PARAA – $17.92 – NASDAQ) is the product of the December 2019 recombination of Viacom and CBS, two companies controlled by the family of the late Sumner Redstone through National Amusements (NAI). Paramount is a globally-scaled content company, with networks including CBS, Showtime, Nickelodeon, MTV, Comedy Central, VH1, BET, thirty television stations, and the Paramount movie studio. The company has used its increased scale to better navigate the shifts in consumer behavior and monetization primarily through the successful launch of its Paramount+ direct-to-consumer platform. In July 2024, NAI and Paramount agreed to a transaction whereby Skydance Media would purchase NAI and a stake in Paramount and combine its existing studio businesses with Paramount.

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Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end.