During his recent interview with Forbes, Mario Gabelli explained how anyone can become a bottoms-up industry analyst. Here’s an excerpt from the interview:
Gabelli: First I think it is simple. Because when I was at Fordham I was an accounting major, financing global taxes, and whatever in Columbia graduate school.
You basically take an annual report and you drill into it.
Okay, so you look at that but more importantly because you follow an industry you go in and read all the trade magazines. You go to all the conferences John. You go see it. Five, six companies.
So if I’m visiting company X that’s making brake pads I can ask them, what’s going on in the industry?
But then I go to the second company ask them what’s going on about company X, and so you get a feedback mechanism.
And as a result of that… for example one time there was a company called Safety Clean and they would sell products… I’m sorry Snap-on tools, they then created Safety Clean.
So I’m saying to myself listen I go to a local gas station guy and I say, what are you buying?
Okay so I convinced the company to allow me to ride on the truck and watched how the guy actually functioned and how he made money.
So we go bottoms up in an industry in which we cover a lot. If you’re what they call a special situations analyst or a generalist you don’t have as much time to focus, so the notion is of intense focus on selected Industries.
You can watch the entire discussion here:
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