Mario Gabelli's Gabelli Value 25 Fund 1st-Quarter Shareholder Commentary

INVESTMENT SCORECARD

The first quarter was extraordinary for traditional media stocks including ViacomCBS (7.6% of net assets as of March 31, 2021, +25%), and Discovery (2.1%, +41%) and AMC Networks (0.3%, +49%) as the rotation to value stocks and re-opening beneficiaries and the launch of direct-to-consumer services Paramount+ and Discovery+ led the stocks to nearly triple by early March. In retrospect, it appears that leveraged momentum trades by funds including Archegos Capital fueled some of those gains and ultimately led to significant declines in the final days of the quarter as Archegos collapsed and its positions quickly liquidated. Nevertheless, the stocks were large positive contributors for the quarter and appear to have stabilized. At long last, Loral Space & Communications (0.8%, +78%) reached an agreement with Canadian pension fund PSP to roll their stakes in Telesat into a new publicly-traded company; at the same time, Telesat detailed plans for its powerful low earth orbit (LEO) satellite constellation. Finally, American Express (4.6%, +18%) performed well in anticipation of accelerated consumer spending (particularly on travel), better than expected credit losses and a positive shift in sentiment toward financial services.

After a strong 2021, Liberty Broadband (2.0%/0.3%, -5%/-8%), 26% owner of cable operator Charter Communications, detracted from performance in anticipation of difficult subscriber addition comparisons, fears of intensifying competition from wireless operators and increased regulation. Despite the potential for significant cash savings and enhanced strategic flexibility, Madison Square Garden Entertainment's (1.5%, -22%) all-stock acquisition of former corporate sibling MSG Networks was poorly received. MSGE's primary assets include its eponymous arena, the Las Vegas Sphere, the Radio City Christmas Spectacular and Tao restaurants, all of which are poised to rebound strongly while MSGN's regional sports networks will likely face years of secular deterioration. However, at this point it would appear the market has overly discounted MSGN's prospects and impact on MSGE.

COMPARATIVE RESULTS

Average Annual Returns through March 31, 2021 (a) (b)

Total returns and average annual returns reflect changes in share price, reinvestment of distributions, and are net of expenses.

Performance for periods less than one year is not annualized.

LET'S TALK STOCKS

The following are stock specifics on selected holdings of our Fund. Favorable earnings prospects do not necessarily translate into higher stock prices, but they do express a positive trend that we believe will develop over time. Individual securities mentioned are not necessarily representative of the entire portfolio. For the following holdings, the percentage of net assets and their share prices stated in U.S. dollar equivalent terms are presented as of March 31, 2021.

Bank of New York Mellon Corp. (BK, Financial) (2.8%) (BK – $47.29 – NYSE) is a global leader in providing financial services to institutions and individuals. The company operates in more than one hundred markets worldwide and strives to be the global provider of choice for investment management and investment services. As of December 2020, the firm had $41.1 trillion in assets under custody and $2.0 trillion in assets under management. Going forward, we expect BK to benefit from higher interest rates, rising global incomes and the cross border movement of financial transactions.

Discovery Inc. (DISCA, Financial) (DISCK, Financial) (2.1%) (DISCA/DISCK – $36.89/$43.46 – NASDAQ), located in Silver Spring, Maryland, is a global nonfiction media and entertainment company that provides programming to pay-tv distributors through network brands such as the Discovery Channel, TLC, Animal Planet, HGTV, Food Network, and ID. Discovery generates 50% of revenue via long term agreements with pay-tv distributors, is diversified internationally and owns most of its low cost programming. Industry leading margins are especially attractive, given the low capital intensity of the cable network business. The company is pivoting to OTT in order to connect directly with consumers allowing it to both charge more and gather data directly, resulting in higher advertising rates. We also believe Discovery could be an attractive acquisition target for a number of larger media/OTT companies, given the acceleration in industry consolidation. DISCA trades at 8.6x 2022P EBITDA, which compares favorably to the AT&T acquisition of Time Warner for 13x EBITDA and Disney's acquisition of Fox's studio assets for 15x EBITDA.

Madison Square Garden Sports Co. (MSGS, Financial) (1.5%) (MSG – $81.80 – NYSE), owner of the New York Knicks basketball team and the New York Rangers hockey team, is one the few ways for the public to access the positive dynamics of sports franchises. The company's predecessor was originally spun-off from Cablevision in 2010 and subsequently separated its regional sports networks as MSG Networks, and then its venue and entertainment businesses via Madison Square Garden Entertainment. Although the company was negatively impacted by a shortened season and lack of live fans due to COVID-19, the value of the teams has been growing along with the global popularity of basketball. At this writing, it appears the NBA and NHL should be able resume "normal" seasons with fans in 2021-22. The Knicks on-court has also improved with a core of young players and significant draft capital that should engender additional fan engagement and create incremental pricing power in future years.

ViacomCBS (VIAC, Financial) (7.6%) (VIA – $47.17 – NASDAQ) is the product of the December 2019 recombination of Viacom and CBS, two companies controlled by the family of the late Sumner Redstone. ViacomCBS is a globally-scaled content company with networks including CBS, Showtime, Nickelodeon, MTV, Comedy Central, VH1, BET, thirty television stations and the Paramount movie studio. The companies separated in 2005, but changes in the media landscape have put a premium on global scale. Together, ViacomCBS should be able to better navigate shifts in consumer behavior and monetization while generating significant cost savings and enhancing revenue growth with the newly launched Paramount+ direct-to-consumer platform as a centerpiece.

Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end.