Gabelli Growth Sells Remaining Stake in Schwab

The $2-billion Gabelli Growth Fund sold its remaining stake in Charles Schwab Corp. for more than $19 million, completing a process it began three months ago because the price had risen too high, portfolio manager Howard Ward said Monday.

Gabelli Growth, which owned 750,750 shares of Schwab at the end of 1998, has been selling blocks of 5,000 to 10,000 shares since the beginning of this year, Ward said. The final 200,000 shares were sold Thursday and Monday at about $95 each--five times the mutual fund’s average cost of $19, he said.

“I started to reduce my holdings in the mid-50s,” Ward said in an interview at the Rye, N.Y., offices of Gabelli Funds Inc. “I can’t justify it at this price, and I wouldn’t buy it here.”

Shares of Schwab, the No. 1 discount and online broker, have more than quadrupled since October, when Gabelli Growth last bought shares, as investors snapped up stocks of companies that conduct business on the Internet. Monday, Schwab rose $9.13, or 9.7%, to a record $103.38.

“In the fourth quarter last year it became an Internet stock, and it never looked back,” Ward said. “I love the Schwab franchise, and I hope I’ll be able to buy back in at half the price in the next--pick your time frame--12 months.”

A spokesman for San Francisco-based Schwab declined to comment on the sale.

Gabelli Growth ranked No. 149 out of 999 growth funds in the 12 months ended March 31, according to Bloomberg Fund Performance. Its 24.1% return exceeded that of the Standard & Poor’s 500-stock index, which gained 18.5% over the same period.

Schwab is selling at more than 80 times projected 1999 earnings, compared with about 20 for Merrill Lynch & Co., the biggest U.S. securities firm. “It’s not four times better than Merrill Lynch,” Ward said. “It’s not going to grow four times as fast.”