Growing Rich - Arabictrader.com

KIRK KAZANJIAN
until it had 1,000 shareholders or $25 million in net assets. It didn’t
reach the 1,000-shareholder mark until August 1988, 16 months later.
As a result, the fund and Bramwell got little media exposure at first,
because few people knew either existed. “Fortunately, I made some
good macro calls in the fall of 1987,” she says. “I had about 40 percent
of the portfolio in cash by mid-October. When the market went down,
that allowed me to have a great fourth quarter relative to everybody
else.” Bramwell believes the crash of 1987 was partially caused by
short-term traders who abruptly sold after hearing that the Ways and
Means Committee of Congress was considering a plan to eliminate
the tax deductibility of interest expense for merger-and-acquisition
debt, thereby significantly changing the investment carrying cost. In
her opinion, this selling created a snowball effect, leading to the abrupt
fall. She felt, however, that specific underlying company fundamentals
generally remained strong.
Given that, Bramwell went out and bought several distressed IPOs,
including Budget Rent-a-Car and HWC Distribution, a wire-supply
company. “They were particularly stressed because after the crash
investors sold their biggest losers at year-end for the tax write-offs,”
she says. “In the first half of 1988, I was fully invested. Other investors
were waiting to see what would happen and held a lot of cash. The
IPOs I bought started to take off. The fund was up 39 percent in 1988
and 40 percent in 1989. Gabelli Growth became the number-one
equity fund in the nation over the three-year period ending in August
1990.” That strong performance attracted attention. The fund began
garnering top recommendations from various investment magazines,
newsletters, and financial advisers, which led to increased assets.
THE STAR MANAGER VERSUS THE BOSS
Although it had his name on the cover, Mario Gabelli himself was
not directly involved with the fund. “I was cited in the prospectus as
the portfolio manager from day one,” Bramwell points out. “I was
president of the fund and chaired all meetings of the board of directors.
Mario wasn’t even on the board for the first five years. I made
all of the investment decisions.” The media took notice when Bramwell
outperformed her boss. A 1989 article in Forbes was headlined “Top
stock picker Mario Gabelli faces stiff competition from one of his own
employees.” And, in what turned out to be a prophetic statement, The
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