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Gabelli Shares Priced at $17.50

The famed fund manager's company begins trading Thursday on the NYSE.

He's the epitome of the star manager. An omnipresent figure at major mutual fund conferences, a


roundtable regular and a


manager of the year -- and now, he's up for sale.

As expected,

Gabelli Asset Management's

initial public offering of 6 million shares of common stock priced late Wednesday at $17.50. The offering raised $105 million. The shares will begin trading Thursday on the

New York Stock Exchange

under the symbol GBL.

And make no mistake, each share in the money management firm is an unqualified vote of confidence for Gabelli -- chairman, chief executive officer and chief investment officer of GAM.

Gabelli will own 97.6% of the combined voting power of all classes of voting stock. That means he will have the ability to elect all board members and determine the outcome of any matter submitted to a shareholder vote. In short, he will call the shots. Indeed, the No. 1 risk to owning stock in the firm, according to the company's registration, is Gabelli's control.

The No. 2 risk is losing Gabelli. He's responsible for managing a significant majority of the company's assets -- its bread and butter -- says the firm. To keep him, GAM will pay plenty. In addition to his portfolio management compensation and account executive fees (more than $23 million in 1997), Gabelli also will receive an annual incentive-based management fee of 10% of the pretax profits of the company and a deferred payment of $50 million on Jan. 2, 2002, with interest payable quarterly on the deferred amount at an annual rate of 6%. The package could exceed $120 million over the next three years. Not bad for a guy heading a firm with $16.3 billion in assets under management.

By comparison, George Roche, chairman and president of

T. Rowe Price

, which has $148 billion under management, received $2.5 million in total compensation in 1997. Charles Johnson, president and chief executive officer of

Franklin Resources

, which has $220 billion under management, got $1.3 million.

Gabelli's deal is especially good when you consider he won't have to devote all his time to GAM. According to the firm's registration statement, Gabelli will be allowed to continue managing existing accounts outside the company, which currently total $110 million.

Investors in Gabelli's funds haven't profited quite as much as he has recently. Last year only three of GAM's 13 equity funds tracked by


beat the

S&P 500

. Only one of those is managed by Gabelli. The other five funds that he oversees lagged miserably.

Investors willing to place their bets on Gabelli Thursday should be aware the firm already has an IOU to the star manager. That $50 million he'll get in three years will be taken as a charge of $1.10 a share in the first quarter of 1999.