Chris Marangi, Co-CIO of Value at Gabelli Funds, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss how investors are considering diversification opportunities away from the large capitalization growth stocks that have been driving market indices.
Gabelli is a publicly traded asset management company with $32 billion in assets under management (AUM), including $21 billion in funds and $11 billion in separately managed accounts (SMAs).
Marangi notes that value has done fairly well in the last couple of years due to a resurgence of some financial and energy stocks and investors who are starting to look for diversification beyond the seven stocks driving the growth indices. The success of large technology companies is understandable due to their cash flow generation, fortress balance sheets, and the ability to take advantage of globalization and a low interest rate environment.
The next ten years might challenge the success of large technology stocks as interest rates and increased and globalization is starting to reverse. Investors looking to diversify out of large technology stocks are considering smaller-cap and international stocks. Small cap stocks have been especially ignored in recent years, so it can be worth the time to find opportunities through deep fundamental analysis. Gabelli’s analysis is bottom-up, with the team finding investment opportunities in every sector and market cap range. The financial sector is likely to benefit from regulatory tailwinds and a steepening yield curve.
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