SocialFunds.com reported that the fund uses short selling and merger arbitrage strategies and screens out companies involved in abortion, contraception, stem cells, and pornography, as well as the top 50 defense contractors. Gabelli performs the research behind these screens in house, as well as using the SIMON database, a Web-based portfolio screening tool from the Social Investment Research Service (SIRS) of Institutional Shareholder Services (ISS).
According to the report, GAMCO decided to create the fund because of demand from Gabelli’s SRI clients, a large portion of which come from the Catholic institutional investment community.
The primary hedging tactics employed by the new fund, GAMCO SRI Partners, include long/short techniques as well as merger arbitrage.
According to the report, the average merger arbitrage holding period in the portfolio is 45 to 60 days. Gabelli intends to constitute the portfolio with 60 to 80 core holdings in both the long/short and the merger arbitrage strategies, with a net leaning toward long holdings. The minimum investment is $500,000, with a one-year lock-up during which time investors cannot redeem shares. The fund charges a management fee of 1.35% as well as 20% of the profits, the report said.