INVESTMENT SCORECARD
Top contributors during the first quarter included Sony (2.3% of net assets as of March 31, 2023) (+19%), whose shares were higher after the company announced strong fiscal third quarter earnings led by its Games & Services and Music segments, regaining ground after the stock was challenged in 2022 due to concerns about implications from Microsoft’s planned acquisition of video game maker Activision as well as the weak macro outlook in the smartphone market, in which Apple is the largest customer of Sony’s image sensors. Shares of LVMH Moet Hennessy (0.9%)(+26%) performed strongly as the company reported record revenues and profits in 2022, driven primarily by its Fashion & Leather Goods business (which comprises approximately half of revenues and ¾ of operating profit), but also by excellent performance in its Wine & Spirits and Watches & Jewelry businesses. Warner Bros. Discovery (0.6%)(+59%) shares rose as the company’s management team, led by CEO David Zaslav, has initiated a cost and revenue turnaround strategy focusing on a more efficient content spending structure and relaunch of brand streaming platforms. AMETEK (3.6%) (+4%) continues to generate positive orders growth, particularly across its Aerospace & Defense and Automation platforms, and is now accelerating M&A activity as it faces less competition for deals from funding-constrained private equity firms. Crane (1.2%) (+13%) shares rose ahead of its April 3rd spin-off of Crane Company, its highly engineered industrial products business, from Crane Holdings, which retained the payment and merchandising technologies businesses and was renamed Crane NXT (NYSE: CXT). The separation will allow each company to better focus on its core competencies and customers, which should lead to operational efficiencies and a greater ability to respond to changes in their respective markets.
COMPARATIVE RESULTS
Average Annual Returns through March 31, 2023 (a)
Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.
Performance returns for periods of less than one year are not annualized.
| Gabelli Asset Fund | QTR | 1 Year | 5 Year | 10 Year | 15 Year | Since Inception | |
| (03/03/86) | |||||||
| Class I (GABIX) (b) | 4.44% | (3.10)% | 7.40% | 8.42% | 8.23% | 11.32% | |
| S&P 500 Index (c) | 7.50 | (7.73) | 11.19 | 12.24 | 10.06 | 10.54 |
Liberty SiriusXM (-28%) shares were lower as a recent slowdown in the used car market could impact near-term subscriber growth and concerns over SiriusXM’s recent investment in satellite network buildout and mobile streaming capabilities. Shares of LSXMK continue to trade at a significant discount relative to its 82% stake in SIRI, and we anticipate the company is well positioned to benefit from in-vehicle channel growth and upside from an enhanced streaming platform. Deere & Company (3.2%) (-3%) shares declined in the quarter on cyclical concerns regarding agricultural machinery, where Deere carries dominant market share. Agricultural commodity declines and concerns about the ag cycle also took shares of Archer Daniels Midland (0.5%) (-13%) lower. CVS Health (0.5%) (-20%) also declined as investors reacted poorly to the company’s plan to acquire primary care physician network Oak Street Health for almost $11 billion in cash, as well as also concerns around Medicare Advantage reimbursement rates and audits, although this was resolved favorably in April. Shares of Genuine Parts Co. (2.2%) (-3%) declined despite reporting solid fourth quarter results, in which GPC generated an 11% increase in comparable sales and a 15% increase in revenue, as investors took gains in defensive names that performed well in 2022 and cautiousness around the Industrial segment, which now constitutes 40% of company revenue.
The Asset Fund is subject to the risk that the portfolio securities’ PMV may never be realized by the market, or that the portfolio securities’ prices decline.
LET’S TALK STOCKS
Crane Holdings Co. (CXT, Financial) (1.2% of net assets as of March 31, 2023) (CXT – $113.50 – NYSE), based in Stamford, Connecticut, is a diversified manufacturer of highly engineered industrial products comprised of four business segments: Aerospace & Electronics, Process Flow Technologies, Payments & Merchandising Technologies, and Engineered Materials, with over 11,000 employees across 34 countries. The company announced in March 2022 that it will separate into two independent companies, where the Payment and Merchandising Technologies business will become “Crane NXT” and the Aerospace & Electronics and Process Flow Technologies business retain the Crane Co. name.
Formento Economico Mexicano (FMX, Financial) (0.2%) (FMX – $95.19 – NYSE), S.A.B de C.V (FEMSA) is a family-controlled, Monterrey, Mexico-based diversified holding company. The company primarily engages in two lines of business: the operation of convenience stores, pharmacies, and fuel stations in Mexico, South America, and Western Europe; and the bottling and distribution of beverages and other products through its 47% economic interest (56% voting interest) in Coca-Cola FEMSA (KOF), the Coca-Cola Company’s largest bottling partner globally. FEMSA also owns a suite of logistics and distribution businesses that serve the U.S. and Latin American markets, a significant equity stake in the global beer manufacturer Heineken, and a minority interest in U.S. retailer Jetro/Restaurant Depot. In early 2023, FEMSA announced the results of an exhaustive strategic review and stated its intention to divest its interests in Heineken and all businesses not related to retail and beverages. This process, which began with the February 2023 sale of half its stake in Heineken, will significantly strengthen FEMSAs balance sheet and reduce the complexity of its remaining business. Ultimately, there is a variety of ways that FEMSA can use the proceeds of these transactions to benefit shareholders, and further clarity on management’s intentions may serve as a catalyst in the coming months.
Genuine Parts Co. (GPC, Financial) (2.2%) (GPC – $167.31 – NYSE) is an Atlanta, Georgia-based distributor of automotive and industrial replacement parts. GPC continues to drive outsize growth as consumers return to the road and car owners accept double-digit price increases as they continue to see the value of vehicle repair. Despite some investor hesitancy around the industrial market, GPC has a strong competitive position in both its Industrial and Automotive segments, and should maintain share gains from the last two years of outpacing competitors through scale and operational execution. Management has shown consistent dedication to shareholder value via share repurchases and dividend increases, and has a history of driving solid returns during periods of economic volatility.
When discussing specifiic stocks in the portfolios of the Funds, favorable earnings prospects do not necessarily translate into higher stock prices, but they do express a positive trend that we believe will develop over time. Individual securities mentioned are not necessarily representative of a Fund’s entire portfolio. For the holdings discussed, the percentage of the Fund’s net assets and their share prices stated in U.S. dollar equivalent terms are presented as of March 31, 2023.
