Gabelli Starts to Explore Green Scene

Alternative Energy And Supply Chain Will Be Fund Focus
By MARA LEMOS STEINSeptember 3, 2008;

Institutional research brokerage Gabelli & Co. has put together a team to focus on the clean-technology and alternative-energy sector, with an eye to launching an investment fund under its affiliate, Gamco Investors Inc.
"We're of the view that there's a convergence happening between technology and energy," says John Segrich, who joined the firm as a research analyst last month to coordinate what he called the "Gabelli green effort."
The Gabelli firm, founded by famed money manager Mario Gabelli, "has been talking about this internally for a while, but so far the research has been done in a fragmented way," Mr. Segrich says. "We're now taking a coherent approach to develop a product around it. It's a big enough theme that warrants the focus of multiple minds and disciplines."
Mutual funds and hedge funds dedicated to investing in renewable energy and clean technology are being launched with increasing frequency, says David Kathman, a researcher at Morningstar Inc., an investment research firm that tracks the performance of funds.
One area that has been growing strongly is exchange-traded funds, which are gathering assets quickly, he says.
An example of that is First Trust ISE Global Wind Energy Index Fund, which in late July had nearly $60 million in assets only five weeks after its launch. The fund sponsors had a target of reaching $100 million in one year.
The heightened interest in the sector gives rise to concerns that there may be the risk of an investment bubble, Mr. Kathman says. Although not all funds or technologies will survive, and the price of crude oil may come down, the issue of climate change will keep the sector a hot area for investment, he says.
"Even with the oil price pullback ... it won't just go away, because everybody recognizes that something needs to be done to ease our dependence on oil," he says. "It's going to be something that is going to be promoted by the federal government regardless of the short-term fluctuation in oil prices."
As for Mr. Segrich, he is returning to Gabelli, where he started his career as an analyst in 1993, after stints at Goldman Sachs and, most recently, J.P. Morgan in London. At J.P. Morgan, he ran the sell-side technology research team.
Gamco is a publicly traded company that manages about $28 billion in assets in private advisory accounts, mutual funds, closed-end funds, offshore funds and partnerships. It already runs funds focused on utilities and has several investments in the water and technology sectors.
Mr. Segrich says "Gabelli green" will look at existing companies, usually in the industrial sector, that are seeing an impact on their business as they become part of the supply chain for the emerging alternative-energy industry. One such company is Woodward Governor Co., which is making inverters for wind turbines, he says.
The group will also analyze companies that are directly related to the green theme, including solar and wind power, energy storage and smart grid.