CONVERTIBLES
Philosophy
The Gabelli Convertible Securities Team uses convertible securities as a means for reduced volatility equity investing. We believe that convertibles are an attractive, overlooked asset class due to their asymmetrical return profile which allows us to maintain exposure to the upside in their underlying equities while collecting income and reducing our potential downside.
Objectives
We use convertible securities to achieve total returns through a mix of income and capital appreciation. Over long time horizons we aim to achieve returns that are in line with broad equity indices with lower volatility.
Methodology
The managers evaluate every convertible issue to maintain a working knowledge of the convertible universe and to determine whether a convertible may be attractive to include in the portfolio. Following the initial analysis of the convertible's terms, the team does a thorough analysis of the underlying equity fundamentals. The portfolio is constructed from a bottom up perspective, ideally using attractive convertible securities in undervalued equities. Generally, by picking convertibles with attractive asymmetrical return profiles, we construct a portfolio that has a balance of income and capital appreciataion potential which has historically outperformed in flat and down equity markets while still participating in rising equity markets.
Institutional client strategies since 1979.
Thomas Dinsmore, CFAPortfolio Manager, Convertibles
Fairleigh Dickinson - MA
Jane O'KeefePortfolio Manager, Convertibles
Univ. of New Hampshire - BA
James Disnmore, CFAPortfolio Manager, Convertibles
Rutgers University - MBA