Western Investment LLC today announced that it will send the following letter to Gabelli Global Multimedia Fund (NYSE:GGT) shareholders:
May 18, 2010
Dear Fellow Shareholder:
Western Investment LLC is one of the largest shareholders in the Gabelli Global Multimedia Fund (the “Fund” or “GGT”). We are the beneficial owner of 980,632 shares with a current value of almost $7.2 million, representing more than 7% of the Fund’s shares outstanding. We are deeply concerned about our Fund’s direction under the leadership of Mario Gabelli. That is why we are asking for you to vote the GOLD Proxy to elect our two nominees to the Fund’s eight-member Board of Directors and give shareholders two seats at the table.
By almost any measure, the Fund’s performance has been abominable. Mr. Gabelli may seek to put a cheery perspective on it, highlighting the past year or so.
Do Not Be Misled!
Over the past ten years ending December 31, 2009, common stockholders have experienced a negative annual investment total return of almost 5.5% and have seen the Fund’s share price fall from $18.75 to $6.61.
We believe the management of the Fund has acted to protect its own interests above those of shareholders. There is a critical need for independent shareholder representation in the GGT boardroom. We are offering you the opportunity to put it there.
Earlier this year we approached Mr. Gabelli about taking action to reduce the excessive discount to net asset value (NAV) at which the Fund has historically traded. We should not have had to do this. A manager who is concerned with his shareholders would have taken action without prompting.
The Fund’s NAV reflects the value of its portfolio of securities less any debt and amounts due the preferred shareholders. The discount to NAV is the gap between the market price of your stock and its NAV per share. In a well-run fund, the market price and the NAV per share should be very close. If it isn’t, management should see it as a duty to take action to close the gap. This appears to be a foreign concept for Mr. Gabelli not only with respect to GGT, but to other funds managed by him.
For example, The Gabelli Dividend and Income Trust (NYSE: “GDV”) and The Gabelli Healthcare and Wellness Trust (NYSE: “GRX”), both of which are managed by Mr. Gabelli, are also currently trading at double digit discounts.
While Mr. Gabelli is formulating a plan to fix GGT, he might also spend some time thinking about how to fix the problems with these two funds as well.
One time-tested action is for the Fund to aggressively purchase discounted shares in the open market, accommodating those holders who wish to sell and increasing both the NAV and the earnings per share of the remaining shares. The Fund, under Mr. Gabelli, despite being authorized since 2005 to repurchase up to 1.7 million shares, has only bought back on average less than 72,000 shares per year. Hardly enough to make a difference; the discount has remained unacceptable, at times as high as 30.6%.