This story appears in the
February 2004 issue of
Entrepreneur.
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In the days before deregulation of the utility industry,
electric and gas stocks provided investors with a steady income
stream that ranked low on investment stress. That all changed
during the hotshot '90s, as many utility companies bought into
businesses they knew little or nothing about, like
telecommunications or home security. Now the tide has turned, and
gas and electric companies are getting back to what they know
best-power.
"Many [utilities] went into risky businesses and lost as
their share values dropped," says Barry Abramson, co-portfolio
manager of the Gabelli Utilities Fund (GABUX). "The management
that survived learned their lessons, and now many are in better
shape with a 'back to the basics' business
strategy."
That stick-to-your-knitting attitude has worked for Abramson and
his stock selections in the GABUX portfolio. Up nearly 24 percent
year-to-date through November 28, the fund has about 70 stocks in
its portfolio: 5 percent in telecom, 15 percent in gas utilities
and 80 percent in electric utilities.
Abramson prefers regulated utility companies. He invests in all
sizes of companies and seeks out those that may be ripe for a
takeover. But don't expect this five-star Morningstar fund to
be a razzle-dazzler. Basic utility companies aren't made that
way. For conservative investors, this fund is worth a look.
Dian Vujovich is an author, syndicated columnist and
publisher of fund investing site www.fundfreebies.com.