Edgar Filing: GAMCO INVESTORS, INC. ET AL

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 001-14761

GAMCO INVESTORS, INC.

(Exact name of Registrant as specified in its charter)

New York		13-4007862
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Corporate Center, Rye, NY		10580-1422
(Address of principle executive offices)		(Zip Code)

(914) 921-3700

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 		Accelerated filer 

Non-accelerated filer 		Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practical date.

Class		Outstanding at July 31, 2013
Class A Common Stock, .001 par value		6,145,806
Class B Common Stock, .001 par value		19,484,174

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES


PART I.	FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended June 30, 2013 and 2012
	- Six months ended June 30, 2013 and 2012

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended June 30, 2013 and 2012
	- Six months ended June 30, 2013 and 2012

	Condensed Consolidated Statements of Financial Condition:
	- June 30, 2013
	- December 31, 2012
	- June 30, 2012

	Condensed Consolidated Statements of Equity:
	- Six months ended June 30, 2013 and 2012

	Condensed Consolidated Statements of Cash Flows:
	- Six months ended June 30, 2013 and 2012

	Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk (Included in Item 2)

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits

SIGNATURES

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues
Investment advisory and incentive fees	$	77,443		$	67,210		$	150,050		$	134,993
Distribution fees and other income		12,522			11,006			23,875			22,629
Institutional research services		2,325			2,808			4,546			5,151
Total revenues		92,290			81,024			178,471			162,773
Expenses
Compensation		37,759			32,921			73,411			67,475
Management fee		4,846			2,615			8,826			6,799
Distribution costs		11,871			10,012			22,881			20,189
Other operating expenses		6,030			5,109			10,842			10,931
Total expenses		60,506			50,657			115,960			105,394

Operating income		31,784			30,367			62,511			57,379
Other income (expense)
Net gain/(loss) from investments		12,141			(4,171	)		24,432			9,707
Interest and dividend income		2,507			1,782			3,852			3,018
Interest expense		(2,796	)		(4,429	)		(6,284	)		(8,833	)
Shareholder-designated contribution		-			-			(5,000	)		-
Total other income (expense), net		11,852			(6,818	)		17,000			3,892
Income before income taxes		43,636			23,549			79,511			61,271
Income tax provision		15,724			8,686			28,919			22,442
Net income		27,912			14,863			50,592			38,829
Net income/(loss) attributable to noncontrolling interests		19			(242	)		154			(112	)
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	27,893		$	15,105		$	50,438		$	38,941

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	1.09		$	0.58		$	1.96		$	1.48

Diluted	$	1.09		$	0.57		$	1.96		$	1.47

Weighted average shares outstanding:
Basic		25,679			26,258			25,710			26,338

Diluted		25,689			26,426			25,723			26,501

Dividends declared:	$	0.05		$	0.29		$	0.10		$	0.33

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012

Net income	$	27,912		$	14,863		$	50,592		$	38,829
Other comprehensive income, net of tax:
Foreign currency translation		1			22			(48	)		5
Net unrealized gains/(losses) on securities available for sale (a)		(6,900	)		(2,579	)		(860	)		878
Other comprehensive income		(6,899	)		(2,557	)		(908	)		883

Comprehensive income		21,013			12,306			49,684			39,712
Less: Comprehensive income/(loss) attributable to noncontrolling interests		(19	)		242			(154	)		112

Comprehensive income attributable to GAMCO Investors, Inc.	$	20,994		$	12,548		$	49,530		$	39,824

(a) Net of income tax (benefit) / expense of ($4,052), ($1,516), ($505) and $515, respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	June 30,			December 31,			June 30,
	2013			2012			2012
ASSETS
Cash and cash equivalents	$	222,776		$	190,608		$	324,440
Investments in securities		220,440			218,843			249,630
Investments in sponsored registered investment companies		52,341			61,872			59,561
Investments in partnerships		94,535			97,549			102,119
Receivable from brokers		39,669			50,655			41,513
Investment advisory fees receivable		28,240			42,429			26,026
Income tax receivable		413			1,018			402
Other assets		25,087			27,759			23,039
Total assets	$	683,501		$	690,733		$	826,730

LIABILITIES AND EQUITY
Payable to brokers	$	14,986		$	14,346		$	20,113
Income taxes payable and deferred tax liabilities		27,864			25,398			12,846
Capital lease obligation		4,877			4,949			5,013
Compensation payable		59,643			10,535			28,985
Securities sold, not yet purchased		7,598			3,136			7,010
Mandatorily redeemable noncontrolling interests		1,322			1,342			1,352
Accrued expenses and other liabilities		31,971			26,365			29,641
Sub-total		148,261			86,071			104,960

5.5% Senior notes (repaid May 15, 2013)		-			99,000			99,000
5.875% Senior notes (due June 1, 2021)		100,000			100,000			100,000
Zero coupon subordinated debentures, Face value: $20.5 million at June 30, 2013, $21.7
million at December 31, 2012 and $86.3 million at June 30, 2012 (due December 31, 2015)		17,028			17,366			66,598
Total liabilities		265,289			302,437			370,558

Redeemable noncontrolling interests		7,021			17,362			26,162
Commitments and contingencies (Note J)
Equity
GAMCO Investors, Inc. stockholders' equity
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued and outstanding
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
14,295,769, 14,203,146 and 13,781,213 issued, respectively; 6,095,806,
6,121,585 and 6,609,863 outstanding, respectively		13			13			13
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,534,174, 19,624,174 and 20,020,730 shares
outstanding, respectively		20			20			20
Additional paid-in capital		280,210			280,089			266,231
Retained earnings		456,163			408,295			439,292
Accumulated other comprehensive income		25,392			26,300			23,403
Treasury stock, at cost (8,199,963, 8,081,561 and 7,171,350 shares, respectively)		(353,385	)		(347,109	)		(302,300	)
Total GAMCO Investors, Inc. stockholders' equity		408,413			367,608			426,659
Noncontrolling interests		2,778			3,326			3,351
Total equity		411,191			370,934			430,010

Total liabilities and equity	$	683,501		$	690,733		$	826,730

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the six months ended June 30, 2013

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other									Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2012	$	3,326		$	33	$	280,089	$	408,295		$	26,300		$	(347,109	)	$	370,934		$	17,362
Redemptions of
noncontrolling interests		(524	)		-		-		-			-			-			(524	)		(13,394	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			2,875
Net income (loss)		(24	)		-		-		50,438			-			-			50,414			178
Net unrealized gains on
securities available for sale,
net of income tax ($3,477)		-			-		-		-			5,921			-			5,921			-
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax benefit ($3,982)		-			-		-		-			(6,781	)		-			(6,781	)		-
Foreign currency translation		-			-		-		-			(48	)		-			(48	)		-
Dividends declared ($0.10 per
share)		-			-		-		(2,570	)		-			-			(2,570	)		-
Stock based compensation
expense		-			-		29		-			-			-			29			-
Exercise of stock options
including tax benefit		-			-		92		-			-			-			92			-
Purchase of treasury stock		-			-		-		-			-			(6,276	)		(6,276	)		-
Balance at June 30, 2013	$	2,778		$	33	$	280,210	$	456,163		$	25,392		$	(353,385	)	$	411,191		$	7,021

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the six months ended June 30, 2012

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other								Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive		Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income		Stock			Total			Interests
Balance at December 31, 2011	$	3,439		$	33	$	264,409	$	409,191		$	22,520	$	(292,181	)	$	407,411		$	6,071
Redemptions of noncontrolling
interests		-			-		-		-			-		-			-			(393	)
Contributions from
noncontrolling
interests		-			-		-		-			-		-			-			20,508
Net income (loss)		(88	)		-		-		38,941			-		-			38,853			(24	)
Net unrealized gains on
securities available for sale,
net of income tax ($515)		-			-		-		-			878		-			878			-
Foreign currency translation		-			-		-		-			5		-			5			-
Dividends declared ($0.33 per
share)		-			-		-		(8,840	)		-		-			(8,840	)		-
Stock based compensation
expense		-			-		1,740		-			-		-			1,740			-
Exercise of stock options
including tax benefit		-			-		82		-			-		-			82			-
Purchase of treasury stock		-			-		-		-			-		(10,119	)		(10,119	)		-
Balance at June 30, 2012	$	3,351		$	33	$	266,231	$	439,292		$	23,403	$	(302,300	)	$	430,010		$	26,162

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(In thousands)

	Six Months Ended
	June 30,
	2013			2012
Operating activities
Net income	$	50,592		$	38,829
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains/(losses) from partnerships		1,418			(2,651	)
Depreciation and amortization		406			359
Stock based compensation expense		29			1,740
Deferred income taxes		1,421			1,434
Tax benefit from exercise of stock options		16			24
Foreign currency translation gain/(loss)		(48	)		5
Other-than-temporary loss on available for sale securities		14			20
Fair value of donated securities		277			181
Gains on sales of available for sale securities		(10,446	)		(408	)
Accretion of zero coupon debentures		645			2,497
Loss on extinguishment of debt		137			1
(Increase) decrease in assets:
Investments in trading securities		2,538			(10,137	)
Investments in partnerships:
Contributions to partnerships		(8,221	)		(25,743	)
Distributions from partnerships		9,818			27,168
Receivable from brokers		10,986			(20,601	)
Investment advisory fees receivable		14,189			6,131
Income tax receivable and deferred tax assets		605			(362	)
Other assets		2,246			5,466
Increase (decrease) in liabilities:
Payable to brokers		640			9,343
Income taxes payable and deferred tax liabilities		1,551			(4,401	)
Compensation payable		49,108			11,289
Mandatorily redeemable noncontrolling interests		(20	)		(34	)
Accrued expenses and other liabilities		5,530			4,988
Total adjustments		82,839			6,309
Net cash provided by operating activities	$	133,431		$	45,138

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Six Months Ended
	June 30,
	2013			2012
Investing activities
Purchases of available for sale securities	$	(3,953	)	$	(8	)
Proceeds from sales of available for sale securities		21,978			780
Return of capital on available for sale securities		625			842
Net cash provided by investing activities		18,650			1,614

Financing activities
Contributions from redeemable noncontrolling interests		2,875			20,508
Redemptions of redeemable noncontrolling interests		(13,394	)		(393	)
Redemption of 5.5% Senior Notes		(99,000	)		-
Redemptions of noncontrolling interests		(524	)		-
Proceeds from exercise of stock options		76			58
Repurchase of zero coupon subordinated debentures		(1,119	)		(18	)
Dividends paid		(2,570	)		(8,685	)
Purchase of treasury stock		(6,275	)		(10,119	)
Net cash (used in) provided by financing activities		(119,931	)		1,351
Effect of exchange rates on cash and cash equivalents		18			(3	)
Net increase in cash and cash equivalents		32,168			48,100
Cash and cash equivalents at beginning of period		190,608			276,340
Cash and cash equivalents at end of period	$	222,776		$	324,440
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6,262		$	4,979
Cash paid for taxes	$	25,165		$	25,479

Non-cash activity:
- For the six months ended June 30, 2013 and June 30, 2012, the Company accrued dividends on restricted stock awards of $0 and $106, respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2013

(Unaudited)

A. Significant Accounting Policies

Basis of Presentation

Unless we have indicated otherwise, or the context otherwise requires, references in this report to "GAMCO Investors, Inc.," "GAMCO," "the Company," "GBL," "we," "us" and "our" or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries.

The unaudited interim condensed consolidated financial statements of GAMCO included herein have been prepared in conformity with generally accepted accounting principles ("GAAP") in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year's results.

The condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries. Intercompany accounts and transactions are eliminated.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012 from which the accompanying condensed consolidated financial statements were derived.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported on the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Developments

In December 2011, the Financial Accounting Standards Board ("FASB") issued guidance which creates new disclosure requirements about the nature of an entity's right of offset and related arrangements associated with its financial instruments and derivative instruments. In January 2013, the FASB issued guidance which clarifies the scope of the disclosure requirements. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods therein, with retrospective application required. The new disclosures are designed to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards. The Company adopted this guidance on January 1, 2013 and now presents the disclosures required by this guidance in Note B.

In July 2012, the FASB issued guidance allowing companies to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If a company determines, on the basis of qualitative factors, that the fair value of such asset is not more likely than not impaired, it would not need to calculate the fair value of such asset. However, if a company concludes otherwise, it must calculate the fair value of the asset, compare the value with its carrying amount and record an impairment charge, if any. To perform the qualitative assessment, a company must identify and evaluate events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company adopted this guidance on January 1, 2013 without a material impact to the financial statements.

In February 2013, the FASB issued guidance which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income ("AOCI"). The guidance is intended to help entities improve the transparency of changes in other comprehensive income ("OCI") and items reclassified out of AOCI in their financial statements. It does not amend any existing requirements for reporting net income or OCI in the financial statements. The guidance requires entities to disclose additional information about reclassification adjustments, including changes in AOCI balances by component and significant items reclassified out of AOCI. The guidance requires an entity to present information about significant items reclassified out of AOCI by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company adopted this guidance on January 1, 2013 and now presents the disclosures required by this guidance in Note B.

B. Investment in Securities

Investments in securities at June 30, 2013, December 31, 2012 and June 30, 2012 consisted of the following:

	June 30, 2013				December 31, 2012				June 30, 2012
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	27,986	$	27,996	$	42,973	$	42,989	$	50,119	$	50,139
Common stocks		137,600		155,088		125,697		138,478		154,470		162,883
Mutual funds		1,074		1,675		1,072		1,484		1,086		1,406
Other investments		470		719		328		630		323		374
Total trading securities		167,130		185,478		170,070		183,581		205,998		214,802

Available for sale securities:
Common stocks		14,077		33,478		14,822		33,560		15,934		32,815
Mutual funds		843		1,484		1,105		1,702		1,361		2,013
Total available for sale securities		14,920		34,962		15,927		35,262		17,295		34,828

Total investments in securities	$	182,050	$	220,440	$	185,997	$	218,843	$	223,293	$	249,630

Securities sold, not yet purchased at June 30, 2013, December 31, 2012 and June 30, 2012 consisted of the following:

	June 30, 2013				December 31, 2012				June 30, 2012
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Trading securities:	(In thousands)
Common stocks	$	7,668	$	7,381	$	2,593	$	2,867	$	6,194	$	6,687
Other investments		71		217		184		269		12		323
Total securities sold, not yet purchased	$	7,739	$	7,598	$	2,777	$	3,136	$	6,206	$	7,010

Investments in sponsored registered investment companies at June 30, 2013, December 31, 2012 and June 30, 2012 consisted of the following:

	June 30, 2013				December 31, 2012				June 30, 2012
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	19	$	11	$	19	$	20	$	19	$	19
Total trading securities		19		11		19		20		19		19

Available for sale securities:
Closed-end funds		28,435		49,162		35,868		58,511		36,266		56,171
Mutual funds		2,040		3,168		2,055		3,341		2,198		3,371
Total available for sale securities		30,475		52,330		37,923		61,852		38,464		59,542

Total investments in sponsored
registered investment companies	$	30,494	$	52,341	$	37,942	$	61,872	$	38,483	$	59,561

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at the time of purchase are classified as cash equivalents. A substantial portion of investments in securities is held for resale in anticipation of short-term market movements and therefore is classified as trading securities. Trading securities are stated at fair value, with any unrealized gains or losses reported in current period earnings. Available for sale ("AFS") investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary which are recorded as unrealized losses in the condensed consolidated statements of income.

The following table identifies all reclassifications out of accumulated other comprehensive income for the three and six months ended June 30, 2013 (in thousands):

Amount								Affected Line Item in	Reason for
Reclassified								in the Statements	Reclassification
from AOCI								Of Income	from AOCI
Three months ended				Six months ended
June 30, 2013				June 30, 2013

	$	9,849			$	10,446		Net gain from investments	Realized gain / (loss) on sale of securities
		181				331		Other operating expenses	Donation of AFS securities
		(14	)			(14	)	Net gain from investments	Other than temporary impairment of AFS securities
		10,016				10,763		Income before income taxes
		(3,706	)			(3,982	)	Income tax provision
	$	6,310			$	6,781		Net income

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. For the three months ended June 30, 2013 and 2012, the Company had transactions in equity derivatives which resulted in net losses of ($1,000) and net gains of $15,000, respectively. For the six months ended June 30, 2013 and 2012, the Company had transactions in equity derivatives which resulted in net gains of $280,000 and net losses of ($14,000), respectively. At June 30, 2013, December 31, 2012 and June 30, 2012, we held derivative contracts on 1.5 million equity shares, 1.2 million equity shares and 4.7 million equity shares, respectively, with a fair value of $122,000, ($121,000) and ($72,000), respectively; that are included in investments in securities in the condensed consolidated statements of financial condition. These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net gain/(loss) from investments in the condensed consolidated statements of income.

The Company is a party to enforceable master netting arrangements for swaps entered into as part of the investment strategy of the Company's proprietary portfolio. They are typically not used as hedging instruments. These swaps, while settled on a net basis with the counterparties, major U.S. financial institutions, are shown gross in assets and liabilities on the condensed consolidated statements of financial position. The swaps have a firm contract end date and are closed out and settled when each contract expires.

							Gross Amounts Not Offset in the
							Statements of Financial Position
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Assets Presented
	Recognized		Statements of		in the Statements		Financial			Cash Collateral
	Assets		Financial Position		of Financial Position		Instruments			Pledged		Net Amount
Swaps:	(in thousands)
June 30, 2013	$	237	$	-	$	237	$	(177	)	$	-	$	60
December 31, 2012		148		-		148		(132	)		-		16
June 30, 2012	$	942	$	-	$	942	$	(942	)	$	-	$	-

							Gross Amounts Not Offset in the
							Statements of Financial Position
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Liabilities Presented
	Recognized		Statements of		in the Statements		Financial			Cash Collateral
	Liabilities		Financial Position		of Financial Position		Instruments			Pledged		Net Amount
Swaps:	(in thousands)
June 30, 2013	$	177	$	-	$	177	$	(177	)	$	-	$	-
December 31, 2012		132		-		132		(132	)		-		-
June 30, 2012	$	1,014	$	-	$	1,014	$	(942	)	$	-	$	72

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of June 30, 2013, December 31, 2012 and June 30, 2012:

	June 30, 2013
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	14,077	$	19,401	$	-		$	33,478
Closed-end Funds		28,435		20,773		(46	)		49,162
Mutual funds		2,883		1,850		(81	)		4,652
Total available for sale securities	$	45,395	$	42,024	$	(127	)	$	87,292

	December 31, 2012
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	14,822	$	18,738	$	-		$	33,560
Closed-end Funds		35,868		22,645		(2	)		58,511
Mutual funds		3,160		1,883		-			5,043
Total available for sale securities	$	53,850	$	43,266	$	(2	)	$	97,114

	June 30, 2012
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
Common stocks	$	15,934	$	16,881	$	-	$	32,815
Closed-end Funds		36,266		19,905		-		56,171
Mutual funds		3,559		1,825		-		5,384
Total available for sale securities	$	55,759	$	38,611	$	-	$	94,370

Unrealized changes in fair value, net of taxes, for the three months ended June 30, 2013 and June 30, 2012 of ($6.9) million in losses and ($2.6) million in losses, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2013 and June 30, 2012. Return of capital on available for sale securities was $14,000 and $0.3 million for the three months ended June 30, 2013 and June 30, 2012, respectively. Proceeds from sales of investments available for sale were approximately $16.6 million and $0.3 million for the three months ended June 30, 2013 and June 30, 2012, respectively. For the three months ended June 30, 2013 and June 30, 2012, gross gains on the sale of investments available for sale amounted to $9.8 million and $0.1 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the three months ended June 30, 2013 or June 30, 2012. Unrealized changes in fair value, net of taxes, for the six months ended June 30, 2013 and June 30, 2012 of ($0.9) million in losses and $0.9 million in gains, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2013 and June 30, 2012. Return of capital on available for sale securities was $0.6 million and $0.8 million for the six months ended June 30, 2013 and June 30, 2012, respectively. Proceeds from sales of investments available for sale were approximately $22.0 million and $0.8 million for the six months ended June 30, 2013 and June 30, 2012, respectively. For the six months ended June 30, 2013 and June 30, 2012, gross gains on the sale of investments available for sale amounted to $10.4 million and $0.4 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the six months ended June 30, 2013 or June 30, 2012. The basis on which the cost of a security sold is determined is specific identification.

Investments classified as available for sale that are in an unrealized loss position for which other-than-temporary impairment has not been recognized consisted of the following:

	June 30, 2013							December 31, 2012							June 30, 2012
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses		Fair Value
(in thousands)
Cosed-end funds	$	1,449	$	(46	)	$	1,403	$	73	$	(2	)	$	71	$	-	$	-	$	-
Mutual Funds		365		(72	)		293		-		-			-		-		-		-
Total	$	1,814	$	(118	)	$	1,696	$	73	$	(2	)	$	71	$	-	$	-	$	-

At June 30, 2013, there were four holdings in loss positions which were not deemed to be other than temporarily impaired due to the length of time that they had been in a loss position and because they passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In these specific instances, the investments at June 30, 2013 were open and closed-end funds with diversified holdings across multiple companies and across multiple industries. All holdings were impaired for one month at June 30, 2013. The value of these holdings at June 30, 2013 was $1.7 million. If these holdings were to continue to be impaired, we may need to record an impairment in a future period on the condensed consolidated statement of income for the amount of the unrealized loss, which at June 30, 2013 was $118,000.

At December 31, 2012 there was one holding in a loss position which was not deemed to be other-than-temporarily impaired due to the length of time that it had been in a loss position and because it passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In this specific instance, the investment at December 31, 2012 was a closed-end fund with diversified holdings across multiple companies and across multiple industries. The one holding was impaired for one month at December 31, 2012 . The value of this holding at December 31, 2012 was $0.1 million.

At June 30, 2012, there were no available for sale holdings in loss positions.

For the three and six months ended June 30, 2013 there was $14,000 of losses on available for sale securities deemed to be other than temporary. For the three and six months ended June 30, 2012, there was $20,000 of losses on available for sale securities deemed to be other than temporary.

C. Fair Value

The following tables present information about the Company's assets and liabilities by major categories measured at fair value on a recurring basis as of June 30, 2013, December 31, 2012 and June 30, 2012 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2013 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		June 30,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2013
Cash equivalents	$	222,647	$	-	$	-	$	222,647
Investments in partnerships		-		22,513		-		22,513
Investments in securities:
AFS - Common stocks		33,478		-		-		33,478
AFS - Mutual funds		1,484		-		-		1,484
Trading - Gov't obligations		27,996		-		-		27,996
Trading - Common stocks		154,411		8		669		155,088
Trading - Mutual funds		1,675		-		-		1,675
Trading - Other		98		337		284		719
Total investments in securities		219,142		345		953		220,440
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		49,162		-		-		49,162
AFS - Mutual Funds		3,168		-		-		3,168
Trading - Mutual funds		11		-		-		11
Total investments in sponsored
registered investment companies		52,341		-		-		52,341
Total investments		271,483		22,858		953		295,294
Total assets at fair value	$	494,130	$	22,858	$	953	$	517,941
Liabilities
Trading - Common stocks	$	7,381	$	-	$	-	$	7,381
Trading - Other		-		217		-		217
Securities sold, not yet purchased	$	7,381	$	217	$	-	$	7,598

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2012 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		December 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2012
Cash equivalents	$	190,475	$	-	$	-	$	190,475
Investments in partnerships		-		26,128		-		26,128
Investments in securities:
AFS - Common stocks		33,560		-		-		33,560
AFS - Mutual funds		1,702		-		-		1,702
Trading - Gov't obligations		42,989		-		-		42,989
Trading - Common stocks		137,796		7		675		138,478
Trading - Mutual funds		1,484		-		-		1,484
Trading - Other		120		148		362		630
Total investments in securities		217,651		155		1,037		218,843
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		58,511		-		-		58,511
AFS - Mutual Funds		3,341		-		-		3,341
Trading - Mutual funds		20		-		-		20
Total investments in sponsored
registered investment companies		61,872		-		-		61,872
Total investments		279,523		26,283		1,037		306,843
Total assets at fair value	$	469,998	$	26,283	$	1,037	$	497,318
Liabilities
Trading - Common stocks	$	2,867	$	-	$	-	$	2,867
Trading - Other		-		269		-		269
Securities sold, not yet purchased	$	2,867	$	269	$	-	$	3,136

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2012 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		June 30,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2012
Cash equivalents	$	324,156	$	-	$	-	$	324,156
Investments in partnerships		-		23,704		-		23,704
Investments in securities:
AFS - Common stocks		32,815		-		-		32,815
AFS - Mutual funds		2,013		-		-		2,013
Trading - Gov't obligations		50,139		-		-		50,139
Trading - Common stocks		161,956		256		671		162,883
Trading - Mutual funds		1,406		-		-		1,406
Trading - Other		23		-		351		374
Total investments in securities		248,352		256		1,022		249,630
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		56,171		-		-		56,171
AFS - Mutual Funds		3,371		-		-		3,371
Trading - Mutual funds		19		-		-		19
Total investments in sponsored
registered investment companies		59,561		-		-		59,561
Total investments		307,913		23,960		1,022		332,895
Total assets at fair value	$	632,069	$	23,960	$	1,022	$	657,051
Liabilities
Trading - Common stocks	$	6,687	$	-	$	-	$	6,687
Trading - Other		-		323		-		323
Securities sold, not yet purchased	$	6,687	$	323	$	-	$	7,010

The following tables present additional information about assets by major categories measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended June 30, 2013 (in thousands)

								Total
								Unrealized
								Gains or		Total
			Total Realized and					(Losses)		Realized
	March		Unrealized Gains or					Included in		and								Transfers
	31, 2013		(Losses) in Income					Other		Unrealized								In and/or
	Beginning					AFS		Comprehensive		Gains or								(Out) of		Ending
Asset	Balance		Trading			Investments		Income		(Losses)			Purchases		Sales			Level 3		Balance
Financial
instruments owned:

Trading - Common stocks	$	667	$	2		$	-	$	-	$	2		$	-	$	-		$	-	$	669
Trading - Other		299		(3	)		-		-		(3	)		3		(15	)		-		284
Total	$	966	$	(1	)	$	-	$	-	$	(1	)		3	$	(15	)	$	-	$	953

There were no transfers between any Levels during the three months ended June 30, 2013.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended June 30, 2012 (in thousands)

							Total
							Unrealized
							Gains or		Total
			Total Realized and				(Losses)		Realized
	March		Unrealized Gains or				Included in		and						Transfers
	31, 2012		(Losses) in Income				Other		Unrealized						In and/or
	Beginning				AFS		Comprehensive		Gains or						(Out) of		Ending
Asset	Balance		Trading		Investments		Income		(Losses)		Purchases		Sales		Level 3		Balance
Financial
instruments owned:
Trading - Common stocks	$	647	$	24	$	-	$	-	$	24	$	-	$	-	$	-	$	671
Trading - Other		278		59		-		-		59		14		-		-		351
Total	$	925	$	83	$	-	$	-	$	83	$	14	$	-	$	-	$	1,022

There were no transfers between any Levels during the three months ended June 30, 2012.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Six Months Ended June 30, 2013 (in thousands)

								Total
								Unrealized
								Gains or		Total
			Total Realized and					(Losses)		Realized
	December		Unrealized Gains or					Included in		and								Transfers
	31, 2012		(Losses) in Income					Other		Unrealized								In and/or
	Beginning					AFS		Comprehensive		Gains or								(Out) of		Ending
Asset	Balance		Trading			Investments		Income		(Losses)			Purchases		Sales			Level 3		Balance
Financial
instruments owned:

Trading - Common stocks	$	675	$	(6	)	$	-	$	-	$	(6	)	$	-	$	-		$	-	$	669
Trading - Other		362		(2	)		-		-		(2	)		3		(79	)		-		284
Total	$	1,037	$	(8	)	$	-	$	-	$	(8	)	$	3	$	(79	)	$	-	$	953

There were no transfers between any Levels during the six months ended June 30, 2013.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Six Months Ended June 30, 2012 (in thousands)

							Total
							Unrealized
							Gains or		Total
			Total Realized and				(Losses)		Realized
	December		Unrealized Gains or				Included in		and							Transfer
	31, 2011		(Losses) in Income				Other		Unrealized							In and/or
	Beginning				AFS		Comprehensive		Gains or							(Out) of		Ending
Asset	Balance		Trading		Investments		Income		(Losses)		Purchases		Sales			Level 3		Balance
Financial
instruments owned:
Trading - Common stocks	$	670	$	24	$	-	$	-	$	24	$	57	$	(80	)	$	-		671
Trading - Other		284		57		-		-		57		18		(8	)		-		351
Total	$	954	$	81	$	-	$	-	$	81	$	75	$	(88	)	$	-		1,022

There were no transfers between any Levels during the six months ended June 30, 2012.

D. Investments in Partnerships, Offshore Funds and Variable Interest Entities ("VIEs")

The Company is general partner or co-general partner of various affiliated entities in which the Company has investments totaling $81.5 million, $83.9 million and $88.0 million at June 30, 2013, December 31, 2012 and June 30, 2012, respectively, and whose underlying assets consist primarily of marketable securities (the "affiliated entities"). We also have investments in unaffiliated entities of $13.0 million, $13.6 million and $14.1 million at June 30, 2013, December 31, 2012 and June 30, 2012, respectively (the "unaffiliated entities"). We evaluate each entity for the appropriate accounting treatment and disclosure. Certain of the affiliated entities, and none of the unaffiliated entities, are consolidated.

For those entities where consolidation is not deemed to be appropriate, we report them in our condensed consolidated statement of financial condition under the caption "Investments in partnerships". This caption includes those investments, in both affiliated and unaffiliated entities, which the Company accounts for under the equity method of accounting, as well as certain investments that the feeder funds hold that are carried at fair value, as described in Note C. The Company reflects the equity in earnings of these equity method investees and the change in fair value of the consolidated feeder funds ("CFFs") under the caption "Net gain from investments" on the condensed consolidated statements of income.

The following table highlights the number of entities, including voting interest entities ("VOEs"), that we consolidate as well as under which accounting guidance they are consolidated, including CFFs, which retain their specialized investment company accounting, partnerships and offshore funds.

Entities consolidated
	CFFs		Partnerships		Offshore Funds		Total
	VIEs	VOEs	VIEs	VOEs	VIEs	VOEs	VIEs	VOEs
Entities consolidated at December 31, 2011	1	2	-	1	-	1	1	4
Additional consolidated entities	-	-	-	-	-	-	-	-
Deconsolidated entities	-	-	-	-	-	-	-	-
Entities consolidated at June 30, 2012	1	2	-	1	-	1	1	4
Additional consolidated entities	-	-	-	-	-	-	-	-
Deconsolidated entities	-	-	-	-	-	-	-	-
Entities consolidated at December 31, 2012	1	2	-	1	-	1	1	4
Additional consolidated entities	-	-	-	-	-	-	-	-
Deconsolidated entities	-	-	-	-	-	-	-	-
Entities consolidated at June 30, 2013	1	2	-	1	-	1	1	4

At and for the six months ended June 30, 2013 and 2012 and at December 31, 2012, one CFF VIE is consolidated, as the Company has been determined to be the primary beneficiary because it has an equity interest and absorbs the majority of the expected losses and/or expected gains. At and for the six months ended June 30, 2013 and 2012 and at December 31, 2012, the two CFF VOEs, the one Partnership VOE and the one Offshore Fund VOE are consolidated because the unaffiliated partners or shareholders lack substantive rights, and the Company, as either the general partner or investment manager, is deemed to have control.

The following table breaks down the investments in partnerships line by accounting method, either fair value or equity method, and investment type.

	June 30, 2013
	Investment Type
	Affiliated						Unaffiliated
	Consolidated
Accounting method	Feeder Funds		Partnerships		Offshore Funds		Partnerships		Offshore Funds		Total

Fair Value	$	22,514	$	-	$	-	$	-	$	-	$	22,514
Equity Method		-		26,429		32,616		5,942		7,034		72,021

Total	$	22,514	$	26,429	$	32,616	$	5,942	$	7,034	$	94,535

	December 31, 2012
	Investment Type
	Affiliated						Unaffiliated
	Consolidated
Accounting method	Feeder Funds		Partnerships		Offshore Funds		Partnerships		Offshore Funds		Total

Fair Value	$	26,128	$	-	$	-	$	-	$	-	$	26,128
Equity Method		-		28,158		29,679		6,505		7,079		71,421

Total	$	26,128	$	28,158	$	29,679	$	6,505	$	7,079	$	97,549

	June 30, 2012
	Investment Type
	Affiliated						Unaffiliated
	Consolidated
Accounting method	Feeder Funds		Partnerships		Offshore Funds		Partnerships		Offshore Funds		Total

Fair Value	$	23,704	$	-	$	-	$	-	$	-	$	23,704
Equity Method		-		34,008		30,340		7,620		6,447		78,415

Total	$	23,704	$	34,008	$	30,340	$	7,620	$	6,447	$	102,119

The following table includes the net impact by line item on the condensed consolidated statements of financial condition for each category of entity consolidated (in thousands):

	June 30, 2013
	Prior to								Offshore
	Consolidation		CFFs			Partnerships			Funds			As Reported
Assets
Cash and cash equivalents	$	222,441	$	-		$	335		$	-		$	222,776
Investments in securities		215,755		-			7,292			(2,607	)		220,440
Investments in sponsored investment companies		52,332		-			9			-			52,341
Investments in partnerships		100,342		3,189			(8,996	)		-			94,535
Receivable from brokers		27,347		-			1,680			10,642			39,669
Investment advisory fees receivable		28,326		(10	)		-			(76	)		28,240
Other assets		25,412		-			-			88			25,500
Total assets	$	671,955	$	3,179		$	320		$	8,047		$	683,501
Liabilities and equity
Securities sold, not yet purchased	$	7,427	$	-		$	-		$	171		$	7,598
Accrued expenses and other liabilities		136,309		59			21			4,274			140,663
Total debt		117,028		-			-			-			117,028
Redeemable noncontrolling interests		-		3,120			299			3,602			7,021
Total equity		411,191		-			-			-			411,191
Total liabilities and equity	$	671,955	$	3,179		$	320		$	8,047		$	683,501

	December 31, 2012
	Prior to								Offshore
	Consolidation		CFFs			Partnerships			Funds			As Reported
Assets
Cash and cash equivalents	$	189,743	$	-		$	865		$	-		$	190,608
Investments in securities		213,639		-			6,944			(1,740	)		218,843
Investments in sponsored investment companies		61,852		-			20			-			61,872
Investments in partnerships		100,164		5,388			(8,003	)		-			97,549
Receivable from brokers		25,972		-			1,480			23,203			50,655
Investment advisory fees receivable		42,425		9			(5	)		-			42,429
Other assets		32,673		(2,986	)		(1,000	)		90			28,777
Total assets	$	666,468	$	2,411		$	301		$	21,553		$	690,733
Liabilities and equity
Securities sold, not yet purchased	$	3,033	$	-		$	-		$	103		$	3,136
Accrued expenses and other liabilities		76,135		384			21			6,395			82,935
Total debt		216,366		-			-			-			216,366
Redeemable noncontrolling interests		-		2,027			280			15,055			17,362
Total equity		370,934		-			-			-			370,934
Total liabilities and equity	$	666,468	$	2,411		$	301		$	21,553		$	690,733

	June 30, 2012
	Prior to								Offshore
	Consolidation		CFFs			Partnerships			Funds		As Reported
Assets
Cash and cash equivalents	$	323,560	$	-		$	880		$	-	$	324,440
Investments in securities		223,198		-			6,993			19,439		249,630
Investments in sponsored investment companies		59,561		-			-			-		59,561
Investments in partnerships		109,055		1,237			(8,173	)		-		102,119
Receivable from brokers		25,337		-			573			15,603		41,513
Investment advisory fees receivable		26,028		(1	)		(1	)		-		26,026
Other assets		23,226		9			-			206		23,441
Total assets	$	789,965	$	1,245		$	272		$	35,248	$	826,730
Liabilities and equity
Securities sold, not yet purchased	$	6,788	$	-		$	-		$	222	$	7,010
Accrued expenses and other liabilities		87,569		56			20			10,305		97,950
Total debt		265,598		-			-			-		265,598
Redeemable noncontrolling interests		-		1,189			252			24,721		26,162
Total equity		430,010		-			-			-		430,010
Total liabilities and equity	$	789,965	$	1,245		$	272		$	35,248	$	826,730

The following table includes the net impact by line item on the condensed consolidated statements of income for each category of entity consolidated (in thousands):

	Three Months Ended June 30, 2013
	Prior to									Offshore
	Consolidation			CFFs			Partnerships			Funds			As Reported
Total revenues	$	92,613		$	(6	)	$	-		$	(317	)	$	92,290
Total expenses		60,243			35			15			213			60,506
Operating income		32,370			(41	)		(15	)		(530	)		31,784
Total other income, net		11,219			24			33			576			11,852
Income before income taxes		43,589			(17	)		18			46			43,636
Income tax provision		15,724			-			-			-			15,724
Net income		27,865			(17	)		18			46			27,912
Net income attributable to noncontrolling interests		(28	)		(17	)		18			46			19
Net income attributable to GAMCO	$	27,893		$	-		$	-		$	-		$	27,893

	Three Months Ended June 30, 2012
	Prior to									Offshore
	Consolidation			CFFs			Partnerships			Funds			As Reported
Total revenues	$	80,703		$	(1	)	$	-		$	322		$	81,024
Total expenses		50,649			25			8			(25	)		50,657
Operating income		30,054			(26	)		(8	)		347			30,367
Total other income, net		(6,361	)		12			(6	)		(463	)		(6,818	)
Income before income taxes		23,693			(14	)		(14	)		(116	)		23,549
Income tax provision		8,686			-			-			-			8,686
Net income		15,007			(14	)		(14	)		(116	)		14,863
Net income attributable to noncontrolling interests		(98	)		(14	)		(14	)		(116	)		(242	)
Net income attributable to GAMCO	$	15,105		$	-		$	-		$	-		$	15,105

	Six Months Ended June 30, 2013
	Prior to									Offshore
	Consolidation			CFFs			Partnerships			Funds			As Reported
Total revenues	$	179,069		$	(12	)	$	(1	)	$	(585	)	$	178,471
Total expenses		115,458			88			25			389			115,960
Operating income		63,611			(100	)		(26	)		(974	)		62,511
Total other income, net		15,721			134			48			1,097			17,000
Income before income taxes		79,332			34			22			123			79,511
Income tax provision		28,919			-			-			-			28,919
Net income		50,413			34			22			123			50,592
Net income attributable to noncontrolling interests		(25	)		34			22			123			154
Net income attributable to GAMCO	$	50,438		$	-		$	-		$	-		$	50,438

	Six Months Ended June 30, 2012
	Prior to									Offshore
	Consolidation			CFFs			Partnerships			Funds			As Reported
Total revenues	$	163,282		$	(2	)	$	(1	)	$	(506	)	$	162,773
Total expenses		105,170			48			19			157			105,394
Operating income		58,112			(50	)		(20	)		(663	)		57,379
Total other income, net		3,183			97			17			595			3,892
Income before income taxes		61,295			47			(3	)		(68	)		61,271
Income tax provision		22,442			-			-			-			22,442
Net income		38,853			47			(3	)		(68	)		38,829
Net income attributable to noncontrolling interests		(88	)		47			(3	)		(68	)		(112	)
Net income attributable to GAMCO	$	38,941		$	-		$	-		$	-			38,941

Variable Interest Entities

We sponsor a number of investment vehicles where we are the general partner or investment manager. Certain of these vehicles are VIEs, but we are not the primary beneficiary, in all but one case, because we do not absorb a majority of the entities' expected losses or expected returns, and they are, therefore, not consolidated. We consolidate the one VIE where we are the primary beneficiary. The Company has not provided any financial or other support to those VIEs where we are not the primary beneficiary. The total net assets of these non-consolidated VIEs at June 30, 2013, December 31, 2012 and June 30, 2012 were $73.4 million, $75.0 million and $80.0 million, respectively. Our maximum exposure to loss as a result of our involvement with the nonconsolidated VIEs is limited to the investment in one VIE and the deferred carried interest that we have in another. On June 30, 2013, December 31, 2012 and June 30, 2012, we had an investment in one of the VIE offshore funds of approximately $9.0 million, $7.7 million and $8.1 million, respectively, which was included in investments in partnerships on the condensed consolidated statements of financial condition. On June 30, 2013, December 31, 2012 and June 30, 2012, we had a deferred carried interest in one of the VIE offshore funds of approximately $46,000, $45,000 and $43,000, respectively, which was included in investments in partnerships on the condensed consolidated statements of financial condition. Additionally, as the general partner or investment manager to these VIEs the Company earns fees in relation to these roles, which given a decline in AUMs of the VIEs would result in lower fee revenues earned by the Company which would be reflected on the condensed consolidated statement of income, condensed consolidated statement of financial condition and condensed consolidated statement of cash flows.

The assets of these VIEs may only be used to satisfy obligations of the VIEs. The following table presents the balances related to the VIE that is consolidated and is included on the condensed consolidated statements of financial condition as well as GAMCO's net interest in this VIE:

	June 30, 2013			December 31, 2012			June 30, 2012
(In thousands)
Investments in partnerships	$	13,457		$	18,507		$	21,831
Accrued expenses and other liabilities		(6	)		(3,010	)		(12	)
Redeemable noncontrolling interests		-			(411	)		(669	)
GAMCO's net interests in consolidated VIE	$	13,451		$	15,086		$	21,150

E. Income Taxes

The effective tax rate for the three months ended June 30, 2013 was 36.0% compared to 36.9% for the prior year three month period. The effective tax rate for the six months ended June 30, 2013 was 36.4% compared to 36.6% for the prior year six month period.

F. Earnings Per Share

The computations of basic and diluted net income per share are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2013		2012		2013		2012
Basic:
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	27,893	$	15,105	$	50,438	$	38,941
Weighted average shares outstanding		25,679		26,258		25,710		26,338
Basic net income attributable to GAMCO Investors, Inc.'s
shareholders per share	$	1.09	$	0.58	$	1.96	$	1.48

Diluted:
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	27,893	$	15,105	$	50,438	$	38,941

Weighted average share outstanding		25,679		26,258		25,710		26,338
Dilutive stock options and restricted stock awards		10		168		13		163
Total		25,689		26,426		25,723		26,501
Diluted net income attributable to GAMCO Investors, Inc.'s
shareholders per share	$	1.09	$	0.57	$	1.96	$	1.47

G. Debt

Debt consists of the following:

	June 30, 2013				December 31, 2012				June 30, 2012
	Carrying		Fair Value		Carrying		Fair Value		Carrying		Fair Value
	Value		Level 2		Value		Level 2		Value		Level 2
(In thousands)
5.5% Senior notes	$	-	$	-	$	99,000	$	100,485	$	99,000	$	100,955
5.875% Senior notes		100,000		104,125		100,000		106,250		100,000		99,950
0% Subordinated debentures		17,028		18,924		17,366		19,638		66,598		75,184
Total	$	117,028	$	123,049	$	216,366	$	226,373	$	265,598	$	276,089

5.5% Senior notes

On May 15, 2003, the Company issued 10-year, $100 million senior notes, of which $99 million was outstanding at December 31, 2012 and June 30, 2012. These senior notes matured and were repaid on May 15, 2013. They paid interest semi-annually at 5.5%.

5.875% Senior notes

On May 31, 2011, the Company issued 10-year, $100 million senior notes. The notes mature on June 1, 2021 and bear interest at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2011. Upon the occurrence of a change of control triggering event, as defined in the indenture, the Company would be required to offer to repurchase the notes at 101% of their principal amount.

Zero coupon Subordinated debentures due December 31, 2015

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 ("Debentures") to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share. The Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. During the three month period ended June 30, 2013, the Company repurchased 11,942 Debentures having a face value of $1.2 million. The redemptions were accounted for as extinguishments of debt and resulted in a loss of $137,000. There were no repurchases during the three month period ended June 30, 2012. During the six month periods ended June 30, 2013 and June 30, 2012, the Company repurchased 11,974 Debentures and 229 Debentures, respectively, having a face value of $1.2 million and $22,900, respectively. The redemptions were accounted for as extinguishments of debt and resulted in a loss of $137,000 and a loss of $1,000, respectively. Gains and losses from the extinguishment of debt are included in net gain/(loss) from investments on the condensed consolidated statements of income. The debt is being accreted to its face value using the effective rate on the date of issuance of 7.45%. At June 30, 2013, December 31, 2012 and June 30, 2012, the debt was recorded at its accreted value of $17.0 million, $17.4 million and $66.6 million, respectively.

The fair value of the Company's debt, which is a Level 2 valuation, is estimated based on either quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard models. Inputs in these standard models include credit rating, maturity and interest rate.

On May 30, 2012, the Securities and Exchange Commission ("SEC") declared effective the "shelf" registration statement filed by the Company. The "shelf" provides the Company with the flexibility of issuing any combination of senior and subordinated debt securities, convertible securities and common and preferred securities up to a total amount of $500 million and replaced the existing shelf registration which expired in July 2012. As of June 30, 2013, $400 million is available on the shelf.

H. Stockholders' Equity

Shares outstanding were 25.6 million, 25.7 million and 26.6 million on June 30, 2013, December 31, 2012 and June 30, 2012, respectively.

Dividends

Payment Date		Record Date	Amount		Type

Three months ended March 31, 2013	March 26, 2013	March 12, 2013	$	0.05	Regular
Three months ended June 30, 2013	June 25, 2013	June 11, 2013	$	0.05	Regular
Six months ended June 30, 2013			$	0.10

Three months ended March 31, 2012	March 27, 2012	March 13, 2012	$	0.04	Regular
Three months ended June 30, 2012	June 26, 2012	June 12, 2012	$	0.04	Regular
Three months ended June 30, 2012	June 26, 2012	June 12, 2012	$	0.25	Special
Six months ended June 30, 2012			$	0.33

Voting Rights

The holders of Class A Common stock ("Class A Stock") and Class B Common stock ("Class B Stock") have identical rights except that (i) holders of Class A Stock are entitled to one vote per share, while holders of Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (ii) holders of Class A Stock are not eligible to vote on matters relating exclusively to Class B Stock and vice versa.

Stock Award and Incentive Plan

The Company maintains two plans approved by the shareholders, which are designed to provide incentives which will attract and retain individuals key to the success of GAMCO through direct or indirect ownership of our common stock. Benefits under the Plans may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash based awards. A maximum of 1.5 million shares of Class A Stock have been reserved for issuance under each of the Plans by a committee of the Board of Directors responsible for administering the Plans ("Compensation Committee"). Under the Plans, the committee may grant restricted stock awards ("RSA") and either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that the committee may determine. Options granted under the plans typically vest 75% after three years and 100% after four years from the date of grant and expire after ten years. RSA shares granted under the Plans typically vest 30% after three years and 100% after five years.

On January 3, 2012, the Company approved the granting of 105,300 RSA shares at a grant date fair value of $43.49 per share. As of June 30, 2012, there were 373,500 RSA shares outstanding that were previously issued at an average weighted grant price of $45.15. All grants of the RSA shares were recommended by the Company's Chairman, who did not receive a RSA, and approved by the Compensation Committee. This expense, net of forfeitures, was recognized over the vesting period for these awards which is 30% over three years from the date of grant and 70% over five years from the date of grant. During the vesting period, dividends to RSA holders were being held for them until the RSA vesting dates and were forfeited if the grantee was no longer employed by the Company on the vesting dates. Dividends declared on these RSAs, less estimated forfeitures, were charged to retained earnings on the declaration date. During November 2012, the Board of Directors accelerated the lapsing of restrictions on all outstanding RSAs resulting in recognition of $10.1 million in stock compensation expense during 2012 that would have been recorded in 2013 through 2016. There were no RSAs outstanding at either June 30, 2013 or December 31, 2012.

For the three months ended June 30, 2013 and June 30, 2012, we recognized stock-based compensation expense of $15,000 and $0.9 million, respectively. For the six months ended June 30, 2013 and June 30, 2012, we recognized stock-based compensation expense of $29,000 and $1.7 million, respectively. Actual and projected stock-based compensation expense for RSA shares and options for the years ended December 31, 2012 through December 31, 2015 (based on awards currently issued or granted) is as follows ($ in thousands):

		2012		2013		2014		2015
	Q1	$	871	$	15	$	7	$	1
	Q2		869		15		3		-
	Q3		875		15		3		-
	Q4		10,968		15		3		-
Full Year		$	13,583	$	60	$	16	$	1

The total compensation cost related to non-vested options not yet recognized is approximately $47,000 as of June 30, 2013. There were no options exercised for the three months ended June 30, 2013. For the three months ended June 30, 2012, proceeds from the exercise of 2,000 stock options were $58,000 resulting in a tax benefit to GAMCO of $3,000. For the six months ended June 30, 2013 and 2012, proceeds from the exercise of 2,623 and 2,000 stock options, respectively, were $76,000 and $58,000, respectively, resulting in a tax benefit to GAMCO of $16,000 and $3,000, respectively. The Company recognized $21,000 in tax benefits from 3,900 RSAs that vested during the six months ended June 30, 2012.

Stock Repurchase Program

In March 1999, GAMCO's Board of Directors established the Stock Repurchase Program to grant management the authority to repurchase shares of our Class A Common Stock. On February 5, 2013, our Board of Directors authorized an incremental 500,000 shares to be added to the current buyback authorization. For the three months ended June 30, 2013 and June 30, 2012, the Company repurchased 81,726 shares and 3,369 shares, respectively, at an average price per share of $52.73 and $44.08, respectively. For the six months ended June 30, 2013 and June 30, 2012, the Company repurchased 118,402 shares and 228,102 shares, respectively, at an average price per share of $52.99 and $44.34, respectively. From the inception of the program through June 30, 2013, 8,600,767 shares have been repurchased at an average price of $41.81 per share. At June 30, 2013, the total shares available under the program to be repurchased in the future were 534,041.

I. Goodwill and Identifiable Intangible Assets

At June 30, 2013, $3.5 million of goodwill is reflected within other assets on the condensed consolidated statements of financial condition with $3.3 million related to a 93%-owned subsidiary, Gabelli Securities, Inc. and $0.2 million related to G.distributors, LLC. The Company assesses the recoverability of goodwill at least annually, or more often should events warrant, using a qualitative assessment of whether it is more likely than not that an impairment has occurred to determine if a quantitative analysis is required. There were no indicators of impairment for the three months ended June 30, 2013 or June 30, 2012, and as such there was no impairment analysis performed or charge recorded.

As a result of becoming the advisor to the Gabelli Enterprise Mergers and Acquisitions Fund and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.9 million within other assets on the condensed consolidated statements of financial condition at June 30, 2013, December 31, 2012 and June 30, 2012. The investment advisory agreement is subject to annual renewal by the fund's Board of Directors, which the Company expects to be renewed, and the Company does not expect to incur additional expense as a result, which is consistent with other investment advisory agreements entered into by the Company. The advisory contract is next up for renewal in February 2014. The Company assesses the recoverability of this intangible asset at least annually, or more often should events warrant. There were no indicators of impairment for the three months ended June 30, 2013 or June 30, 2012, and as such there was no impairment analysis performed or charge recorded.

J. Commitments and Contingencies

From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. The Company is also subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. The Company cannot predict the ultimate outcome of such matters. With respect to one such matter, a subsidiary of the Company resolved an outstanding matter regarding lapses in the subsidiary's supervision of certain registered representatives in their role as general partners of outside private partnerships. For all such matters, the condensed consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and, if material, makes the necessary disclosures. Such amounts, both those that are probable and those that are reasonably possible, are not considered material to the Company's financial condition, operations or cash flows.

The Company indemnifies the clearing brokers of G.research, Inc. (formerly known as Gabelli & Company, Inc.), our broker-dealer subsidiary, for losses they may sustain from the customer accounts that trade on margin introduced by it. At June 30, 2013, the total amount of customer balances subject to indemnification (i.e. unsecured margin debits) was immaterial. The Company also has entered into arrangements with various other third parties many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the performance of obligations under the agreements. The Company has had no claims or payments pursuant to these or prior agreements and believes the likelihood of a claim being made is remote. The Company's estimate of the value of such agreements is de minimis, and therefore an accrual has not been made on the condensed consolidated financial statements.

K. Shareholder-Designated Contribution Plan

During the first quarter of 2013, the Company recorded a charge of $5.0 million, or $0.11 per diluted share, net of management fee and tax benefit, related to a newly-adopted Shareholder Designated Charitable Contribution program. Under the program, each shareholder will be eligible to designate a charity to which the company will make a donation based upon the actual number of shares registered in the shareholder's name. Shares held in nominee or street name are not eligible to participate. The Board of Directors will determine, annually, amounts to be contributed per registered share. The Board approved an initial contribution for 2013 of $0.25 per registered share. The Company recorded the initial $5.0 million charge, which is included in accrued expenses and other liabilities in the condensed consolidated statements of financial condition, based on the number of registered shares at the adoption of the program. Based upon the number of share registered as of the record date of July 31, 2013, the total charge to earnings would increase to $5.3 million, if all participants respond on a timely basis.

L. Subsequent Events

On August 6, 2013, the Board of Directors increased its regular quarterly dividend by 20% to $0.06 per share to all of its shareholders, payable on September 24, 2013 to shareholders of record on September 10, 2013.

On August 6, 2013, the Company issued 431,700 RSAs to its professional staff at a grant date fair value of $57.86 per share. The RSAs were recommended by the Company's Chairman, who did not receive an RSA, and approved by the Compensation Committee of the Company's Board of Directors. The Company expects that the additional expense related to this grant will be $20.6 million. This expense, which is net of estimated forfeitures, will be recognized over the vesting period for these awards which is 30% over three years from the date of grant and the remaining 70% ratably on each anniversary of the date of grant from the fourth anniversary through the tenth anniversary. The portion of expense to be incurred in 2013 is estimated to be $1.8 million.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK)

Overview

GAMCO Investors, Inc. ("GAMCO") through the Gabelli brand, well known for its Private Market Value (PMV) with a Catalyst^TM investment approach,is a widely-recognized provider of investment advisory services to mutual funds, institutional and high net worth investors, and investment partnerships, principally in the United States. Through G.research, Inc. (formerly Gabelli & Company, Inc.) ("G.research"), we provide institutional research and brokerage services to institutional clients and investment partnerships. Through G.distributors, LLC ("G.distributors"), we provide mutual fund distribution. We generally manage assets on a fully discretionary basis and invest in a variety of U.S. and international securities through various investment styles. Our revenues are based primarily on the Company's levels of assets under management and fees associated with our various investment products.

Our revenues are highly correlated to the level of assets under management and fees associated with our various investment products, rather than our own corporate assets. Assets under management, which are directly influenced by the level and changes of the overall equity markets, can also fluctuate through acquisitions, the creation of new products, the addition of new accounts or the loss of existing accounts. Since various equity products have different fees, changes in our business mix may also affect revenues. At times, the performance of our equity products may differ markedly from popular market indices, and this can also impact our revenues. General stock market trends will have the greatest impact on our level of assets under management and hence, on revenues.

We conduct our investment advisory business principally through the following subsidiaries: GAMCO Asset Management Inc. (Institutional and High Net Worth), Gabelli Funds, LLC (Mutual Funds) and Gabelli Securities, Inc. (Investment Partnerships). We also act as an underwriter and provide institutional research through G.research, one of our broker-dealer subsidiaries. The distribution of our open-end funds is conducted through G.distributors, our other broker-dealer subsidiary.

Assets under management ("AUM") were $40.5 billion as of June 30, 2013, an increase of 1.0% from AUM of $40.1 billion at March 31, 2013 and an increase of 13.5% from the June 30, 2012 AUM of $35.7 billion. The second quarter 2013 AUM increased $0.4 billion and consisted of market appreciation of $293 million, net cash inflows of $240 million and recurring distributions, net of reinvestments, from open-end and closed-end funds of $145 million. Average total AUM was $40.3 billion in the 2013 quarter versus $35.6 billion in the prior year period, an increase of 13.2%. Average AUM in our open-end equity funds, a key driver to our investment advisory fees, was $14.1 billion in the second quarter of 2013, rising 12.8% from the 2012 quarter average AUM of $12.5 billion.

In addition to management fees, we earn incentive fees for certain institutional client assets, certain assets attributable to preferred issues of our closed-end funds and to our GDL Fund (NYSE: GDL) and investment partnership assets. As of June 30, 2013, assets with incentive based fees were $3.9 billion, 5.4% higher than the $3.7 billion on March 31, 2013 and 2.5% lower than the $4.0 billion on June 30, 2012.

The Company reported Assets Under Management as follows (in millions):

Table I: Fund Flows - 2nd Quarter 2013
									Fund
			Market						distributions,
	March 31,		appreciation/			Net cash			net of			June 30,
	2013		(depreciation)			flows			reinvestments			2013
Equities:
Open-end Funds	$	13,813	$	(11	)	$	417		$	(31	)	$	14,188
Closed-end Funds		6,557		(128	)		94			(114	)		6,409
Institutional & PWM - direct		13,690		358			21			-			14,069
Institutional & PWM - sub-advisory		3,299		69			(183	)		-			3,185
Investment Partnerships		796		5			(23	)		-			778
SICAV (a)		113		-			(20	)		-			93
Total Equities		38,268		293			306			(145	)		38,722
Fixed Income:
Money-Market Fund		1,758		-			(69	)		-			1,689
Institutional & PWM		64		-			3			-			67
Total Fixed Income		1,822		-			(66	)		-			1,756
Total Assets Under Management	$	40,090	$	293		$	240		$	(145	)	$	40,478

The Company reported Assets Under Management as follows (in millions):

Table II: Fund Flows - Six months ended June 30, 2013
								Fund
			Market					distributions,
	December 31,		appreciation/		Net cash			net of			June 30,
	2012		(depreciation)		flows			reinvestments			2013
Equities:
Open-end Funds	$	12,502	$	1,129	$	619		$	(62	)	$	14,188
Closed-end Funds		6,288		253		96			(228	)		6,409
Institutional & PWM - direct		12,030		1,843		196			-			14,069
Institutional & PWM - sub-advisory		2,924		385		(124	)		-			3,185
Investment Partnerships		801		13		(36	)		-			778
SICAV (a)		119		2		(28	)		-			93
Total Equities		34,664		3,625		723			(290	)		38,722
Fixed Income:
Money-Market Fund		1,681		-		8			-			1,689
Institutional & PWM		60		-		7			-			67
Total Fixed Income		1,741		-		15			-			1,756
Total Assets Under Management	$	36,405	$	3,625	$	738		$	(290	)	$	40,478

Table III: Assets Under Management
	June 30,		June 30,		%
	2012		2013		Inc.(Dec.)
Equities:
Open-end Funds	$	12,496	$	14,188		13.5	%
Closed-end Funds		5,860		6,409		9.4
Institutional & PWM - direct		11,655		14,069		20.7
Institutional & PWM - sub-advisory		2,788		3,185		14.2
Investment Partnerships		781		778		(0.4	)
SICAV (a)		126		93		(26.2	)
Total Equities		33,706		38,722		14.9
Fixed Income:
Money-Market Fund		1,893		1,689		(10.8	)
Institutional & PWM		63		67		6.3
Total Fixed Income		1,956		1,756		(10.2	)
Total Assets Under Management	$	35,662	$	40,478		13.5	%

Table IV: Assets Under Management by Quarter
											% Increase/
											(decrease) from
		6/12		9/12		12/12		3/13		6/13		6/12		3/13
Equities:
Open-end Funds	$	12,496	$	12,758	$	12,502	$	13,813	$	14,188		13.5	%	2.7	%
Closed-end Funds		5,860		6,365		6,288		6,557		6,409		9.4		(2.3	)
Institutional & PWM - direct		11,655		12,189		12,030		13,690		14,069		20.7		2.8
Institutional & PWM - sub-advisory		2,788		2,912		2,924		3,299		3,185		14.2		(3.5	)
Investment Partnerships		781		785		801		796		778		(0.4	)	(2.3	)
SICAV (a)		126		121		119		113		93		(26.2	)	(17.7	)
Total Equities		33,706		35,130		34,664		38,268		38,722		14.9		1.2
Fixed Income:
Money-Market Fund		1,893		1,752		1,681		1,758		1,689		(10.8	)	(3.9	)
Institutional & PWM		63		63		60		64		67		6.3		4.7
Total Fixed Income		1,956		1,815		1,741		1,822		1,756		(10.2	)	(3.6	)
Total Assets Under Management	$	35,662	$	36,945	$	36,405	$	40,090	$	40,478		13.5	%	1.0	%

(a) Includes $101 million, $102 million, $104 million, $99 million and $90 million of proprietary seed capital at June 30, 2012,
September 30, 2012, December 31, 2012, March 31, 2013 and June 30, 2013, respectively.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included in Item 1 to this report.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2013 Compared To Three Months Ended June 30, 2012

(Unaudited; in thousands, except per share data)
	2013			2012
Revenues
Investment advisory and incentive fees	$	77,443		$	67,210
Distribution fees and other income		12,522			11,006
Institutional research services		2,325			2,808
Total revenues		92,290			81,024
Expenses
Compensation		37,759			32,921
Management fee		4,846			2,615
Distribution costs		11,871			10,012
Other operating expenses		6,030			5,109
Total expenses		60,506			50,657
Operating income		31,784			30,367
Other income (expense)
Net gain/(loss) from investments		12,141			(4,171	)
Interest and dividend income		2,507			1,782
Interest expense		(2,796	)		(4,429	)
Total other income (expense), net		11,852			(6,818	)
Income before income taxes		43,636			23,549
Income tax provision		15,724			8,686
Net income		27,912			14,863
Net income/(loss) attributable to noncontrolling interests		19			(242	)
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	27,893		$	15,105

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	1.09		$	0.58
Diluted	$	1.09		$	0.57

Overview

Net income attributable to shareholders of GAMCO for the quarter was $27.9 million or $1.09 per fully diluted share versus $15.1 million or $0.57 per fully diluted share in the prior year's quarter. The quarter to quarter comparison was positively impacted by higher revenues, lower interest expense and higher income from our proprietary investments.

Revenues

Investment advisory and incentive fees for the second quarter 2013 were $77.4 million, 15.2% above the comparable 2012 figure of $67.2 million. Open-end mutual fund revenues increased by 12.7% to $34.5 million from $30.6 million in second quarter 2012 driven by a 12.8% increase in average open-end equity AUM. Our closed-end fund revenues rose 17.9% to $13.8 million in the second quarter 2013 from $11.7 million in 2012 due to a 17.0% increase in non-performance fee based average AUM. Institutional and private wealth management account revenues, excluding incentive fees, which are generally based on beginning of quarter AUM, increased $3.1 million, or 13.9%, to $25.4 million from $22.3 million in second quarter 2012. Incentive fees more than doubled to $2.3 million in the 2013 quarter from $1.1 million in the prior year period. Investment partnership revenues were $1.4 million, a decrease of 6.7% from $1.5 million in second quarter 2012.

Open-end fund distribution fees and other income were $12.5 million for the second quarter 2013, an increase of $1.5 million or 13.6% from $11.0 million in the prior year period, primarily due to higher quarterly average AUM in open-end equity mutual funds that generate distribution fees and increased level of sales of load shares of mutual funds.

Our institutional research revenues were $2.3 million in the second quarter 2013 versus $2.8 million in the prior year period. Although commission revenues were higher in most areas of that business, dealer manager fee revenues from underwriting closed-end fund offerings declined $0.7 million from the prior year period.

Expenses

Compensation costs, which are largely variable, were $37.8 million or 14.9% higher than prior year compensation costs of $32.9 million. The quarter over quarter increase was comprised of variable compensation of $4.8 million related to the increased levels of AUM and $1.0 million in fixed compensation partially offset by a $0.9 million decrease in amortization expense for RSAs issued in prior years.

Management fee expense, which is wholly variable and based on pretax income, increased to $4.8 million in the second quarter of 2013 from $2.6 million in the 2012 period.

Distribution costs were $11.9 million, an increase of $1.9 million or 19.0% from $10.0 million in the prior year's period. This increase in distribution costs was due to an increase in payments to third-party distributors of $2.2 million partially offset by lower amortization of upfront commissions paid to third-party distributors of $0.4 million and a reduction in expense reimbursements to our open-end mutual funds of $0.1 million.

Other operating expenses were $6.0 million in the second quarter of 2013, an increase of $0.9 million, or 17.6%, from $5.1 million in the second quarter of 2012. The quarter to quarter comparison was impacted by increases in client service expenses, costs related to our UCITS fund and charitable contributions as well as lower insurance reimbursements for legal and regulatory costs previously incurred and expensed.

Operating income for the second quarter of 2013 was $31.8 million, an increase of $1.4 million, or 4.6%, from the second quarter 2012's $30.4 million. Operating income, as a percentage of revenues, was 34.4% in the 2013 quarter as compared to 37.5% in the 2012 quarter.

Other

Total other income, net of interest expense, was $11.9 million for the second quarter 2013 versus an expense of $6.8 million in the prior year's quarter. Realized and unrealized gains in our trading portfolio were $12.1 million in the 2013 quarter, a turnaround of $16.3 million from the loss of $4.2 million reported in the 2012 quarter. Interest and dividend income increased by $0.7 million. Interest expense decreased by $1.6 million to $2.8 million in the second quarter of 2013 from $4.4 million in second quarter of 2012 due to a decrease in total average debt outstanding. On May 15, 2013, the $99 million of 5.5% Senior notes matured and were repaid. Additionally, during the third quarter of 2012, we reduced our overall debt through the repurchase of $64.1 million (face value) five year zero coupon subordinated debentures due 2015 ("Debentures").

The effective tax rate ("ETR") for the three months ended June 30, 2013 was 36.0% as compared to the prior year period's effective rate of 36.9%. The 2013 ETR declined largely as a result of having a proportionately higher component of pretax income from investment earnings including dividend income.

Six Months Ended June 30, 2013 Compared To Six Months Ended June 30, 2012

(Unaudited; in thousands, except per share data)
	2013			2012
Revenues
Investment advisory and incentive fees	$	150,050		$	134,993
Distribution fees and other income		23,875			22,629
Institutional research services		4,546			5,151
Total revenues		178,471			162,773
Expenses
Compensation		73,411			67,475
Management fee		8,826			6,799
Distribution costs		22,881			20,189
Other operating expenses		10,842			10,931
Total expenses		115,960			105,394
Operating income		62,511			57,379
Other income (expense)
Net gain from investments		24,432			9,707
Interest and dividend income		3,852			3,018
Interest expense		(6,284	)		(8,833	)
Shareholder-designated contribution		(5,000	)		-
Total other income, net		17,000			3,892
Income before income taxes		79,511			61,271
Income tax provision		28,919			22,442
Net income		50,592			38,829
Net income/(loss) attributable to noncontrolling interests		154			(112	)
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	50,438		$	38,941

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	1.96		$	1.48
Diluted	$	1.96		$	1.47

Overview

Net income attributable to shareholders of GAMCO for the first six months of 2013 was $50.4 million or $1.96 per fully diluted share versus $38.9 million or $1.47 per fully diluted share in the prior year's first six months. Included in the 2013 results is a $5.0 million charge, or $0.11 per diluted share, net of management fee and tax benefit, for our recently adopted shareholder designated charitable contribution program. The period to period comparison, excluding this charge, was positively impacted by higher revenues, lower interest expense and higher income from our proprietary investments.

Revenues

Investment advisory and incentive fees for the six months ended June 30, 2013 were $150.1 million, 11.2% above the comparable 2012 figure of $135.0 million. Open-end mutual fund revenues increased by 7.1% to $66.5 million from $62.1 million in first half 2012 driven by a 7.9% increase in average open-end equity AUM. Our closed-end fund revenues rose 14.2% to $27.4 million in the first half of 2013 from $24.0 million in 2012 due to a 13.9% increase in non-performance fee based average AUM. Institutional and private wealth management account revenues, excluding incentive fees, which are generally based on beginning of quarter AUM, increased $6.0 million, or 14.2%, to $48.5 million from $42.5 million in first half of 2012. During the first half of 2013, we earned $4.7 million in incentive fees, an increase of $1.1 million from $3.6 million earned in the first half of 2012. Investment partnership revenues were $2.9 million, an increase of 7.4% from $2.7 million for the six months ended June 30, 2012 due to an increase in average AUM resulting from net inflows.

Open-end fund distribution fees and other income were $23.9 million for the first six months of 2013, an increase of $1.3 million or 5.8% from $22.6 million in the prior year period, primarily due to higher quarterly average AUM in open-end equity mutual funds that generate distribution fees and an increased level of sales of load shares of mutual funds.

Our institutional research revenues were $4.5 million in the first half of 2013 versus $5.2 million in the prior year period. Revenues were lower despite an increase in commissions from trading activities of $0.3 million due to decreased dealer manager fees from underwriting closed-end fund offerings which totaled $1.0 million.

Expenses

Compensation costs, which are largely variable, were $73.4 million or 8.7% higher than prior year compensation costs of $67.5 million. The period over period increase was comprised of variable compensation of $6.1 million related to the increased levels of AUM and $1.5 million in fixed compensation partially offset by $1.7 million decrease in amortization expense for RSAs issued in prior years.

Management fee expense, which is wholly variable and based on pretax income, increased to $8.8 million for the six months ended June 30, 2013 from $6.8 million in the 2012 period.

Distribution costs were $22.9 million, an increase of $2.7 million or 13.4% from $20.2 million in the prior year's period. This increase in distribution costs was largely due to an increase in payments to third-party distributors of $4.0 million partially offset by lower amortization of upfront commissions paid to third-party distributors of $1.1 million and a reduction in expense reimbursements to our open-end mutual funds of $0.4 million.

Other operating expenses were $10.8 million in the first six months of 2013, a decrease of $0.1 million, or .9%, from $10.9 million in the first half of 2012. The decrease was principally the result of insurance reimbursements for legal and regulatory fees previously incurred and expensed.

Operating income for the first six months of 2013 was $62.5 million, an increase of $5.1 million, or 8.9%, from the first half 2012's $57.4 million. Operating income, as a percentage of revenues, was 35.0% in the 2013 period as compared to 35.3% in the 2012 period.

Other

Total other income, net of interest expense, was $17.0 million for the first six months of 2013 versus $3.9 million in the prior year's quarter. Realized and unrealized gains in our trading portfolio were $24.4 million in the 2013 period, $14.7 million higher than the $9.7 million reported in the 2012 period. Interest and dividend income was higher by $0.9 million. Interest expense decreased by $2.5 million to $6.3 million in the first half of 2013 from $8.8 million in first half of 2012 due to a decrease in total average debt outstanding. On May 15, 2013, the $99 million of 5.5% Senior notes matured, and were repaid. Additionally, during the third quarter of 2012, we reduced our overall debt through the repurchase of $64.1 million (face value) five year zero coupon subordinated debentures due 2015 ("Debentures"). The 2013 period includes a $5.0 million charge related to the newly established Shareholder-designated charitable contribution program in which registered shareholders have the opportunity to participate in determining which charities will receive company contributions.

The effective tax rate for the six months ended June 30, 2013 was 36.4% as compared to the prior year period's effective rate of 36.6%.

LIQUIDITY AND CAPITAL RESOURCES

Our principal assets are highly liquid in nature and consist of cash and cash equivalents, short-term investments, securities held for investment purposes, investments in mutual funds and investment partnerships. Cash and cash equivalents are comprised primarily of 100% U.S. Treasury money market funds managed by GAMCO. Although investments in partnerships and offshore funds are subject to restrictions on the timing of distributions, the underlying investments of such partnerships or funds are, for the most part, liquid, and the valuations of these products reflect that underlying liquidity.

Summary cash flow data is as follows:

	Six months ended
	June 30,
	2013			2012
Cash flows provided by (used in):	(in thousands)
Operating activities	$	133,431		$	45,138
Investing activities		18,650			1,614
Financing activities		(119,931	)		1,351
Effect of exchange rates on cash and cash equivalents		18			(3	)
Net increase		32,168			48,100
Cash and cash equivalents at beginning of period		190,608			276,340
Cash and cash equivalents at end of period	$	222,776		$	324,440

Cash and liquidity requirements have historically been met through cash generated by operating income and our borrowing capacity. We filed a shelf registration with the SEC in 2012 which, among other things, provides us the flexibility to sell any combination of senior and subordinate debt securities, convertible debt securities, equity securities (including common and preferred stock), and other securities up to a total amount of $500 million. The shelf has $400 million which remains available through May 30, 2015.

At June 30, 2013, we had total cash and cash equivalents of $222.8 million, an increase of $32.2 million from December 31, 2012. Cash and cash equivalents of $0.3 million and investments in securities of $7.3 million held by consolidated investment partnerships and offshore funds may not be readily available for the Company to access. Total debt outstanding at June 30, 2013 was $117.0 million, consisting of $17.0 million in Debentures, with a face value of $20.5 million, and $100 million of 5.875% senior notes due 2021.

For the six months ended June 30, 2013, cash provided by operating activities was $133.4 million, an increase of $88.3 million from cash provided in the prior year period of $45.1 million. Cash was provided through an increase in net income of $11.8 million, a decrease in contributions to partnerships of $17.5 million, a $31.6 million decrease in receivable from brokers, a $37.8 million increase in compensation payable, a $8.1 million decrease in investment advisory fees receivable, a $12.7 million decrease in trading investments and $4.9 million from other sources. Reducing cash was a $17.4 million decrease in distributions from partnerships, a $10.0 million increase in gains from sales of available for sale securities and a $8.7 million decrease in payable to brokers. Cash provided by investing activities, related to purchases and proceeds from sales of available for sale securities, was $18.7 million in the first six months of 2013. Cash used in financing activities in the first six months of 2013 was $119.9 million, including $99.0 million used to repay the 5.5% Senior notes that matured on May 15, 2013, $2.6 million paid in dividends, $6.3 million paid for the purchase of treasury stock and $10.5 million in net redemptions from redeemable noncontrolling interests less $0.1 million in proceeds from exercise of stock options.

For the six months ended June 30, 2012, cash provided by operating activities was $45.1 million. Cash provided by investing activities, related to purchases and proceeds from sales of available for sale securities, was $1.6 million in the first six months of 2012. Cash provided by financing activities in the first six months of 2012 was $1.4 million.

Based upon our current level of operations and anticipated growth, we expect that our current cash balances plus cash flows from operating activities and our borrowing capacity will be sufficient to finance our working capital needs for the foreseeable future. We have no material commitments for capital expenditures.

We have two broker-dealers, G.research and G.distributors, which are subject to certain net capital requirements. Both broker-dealers compute their net capital under the alternative method permitted, which requires minimum net capital of the greater of $250,000 or 2% of the aggregate debit items in the reserve formula for those broker-dealers subject to Rule 15c3-3 promulgated under the Securities Exchange Act of 1934. The requirement was $250,000 for each broker-dealer at June 30, 2013. At June 30, 2013, G.research had net capital, as defined, of approximately $5.5 million, exceeding the regulatory requirement by approximately $5.2 million, and G.distributors had net capital, as defined, of approximately $3.3 million, exceeding the regulatory requirement by approximately $3.1 million. Net capital requirements for our affiliated broker-dealers may increase in accordance with rules and regulations to the extent they engage in other business activities.

Market Risk

Our primary market risk exposure is to changes in equity prices and interest rates. Since over 90% of our AUM are equities, our financial results are subject to equity-market risk as revenues from our investment management services are sensitive to stock market dynamics. In addition, returns from our proprietary investment portfolio are exposed to interest rate and equity market risk.

The Company's Chief Investment Officer oversees the proprietary investment portfolios and allocations of proprietary capital among the various strategies. The Chief Investment Officer and the Board of Directors review the proprietary investment portfolios throughout the year. Additionally, the Company monitors its proprietary investment portfolios to ensure that they are in compliance with the Company's guidelines.

Equity Price Risk

The Company earns substantially all of its revenue as advisory and distribution fees from our affiliated open-end and closed-end funds, Institutional and Private Wealth Management assets, and Investment Partnership assets. Such fees represent a percentage of AUM, and the majority of these assets are in equity investments. Accordingly, since revenues are proportionate to the value of those investments, a substantial increase or decrease in equity markets overall will have a corresponding effect on the Company's revenues.

With respect to our proprietary investment activities, included in investments in securities of $220.4 million and investments in sponsored registered investment companies of $52.3 million at June 30, 2013 were investments in United States Treasury Bills and Notes of $28.0 million, mutual funds and closed-end funds, largely invested in equity products, of $55.5 million, a selection of common and preferred stocks totaling $188.6 million, and other investments of approximately $0.6 million. In addition, we may alter our investment holdings from time to time in response to changes in market risks and other factors considered appropriate by the Chief Investment Officer. Of the approximately $188.6 million invested in common and preferred stocks at June 30, 2013, $33.5 million represented our investment in Westwood Holdings Group Inc., and $61.3 million was invested by the Company in risk arbitrage opportunities in connection with mergers, consolidations, acquisitions, tender offers or other similar transactions. Risk arbitrage generally involves announced deals with agreed upon terms and conditions, including pricing, which typically involve less market risk than common stocks held in a trading portfolio. The principal risk associated with risk arbitrage transactions is the inability of the companies involved to complete the transaction. Securities sold, not yet purchased are stated at fair value and are subject to market risks resulting from changes in price and volatility. At June 30, 2013, the fair value of securities sold, not yet purchased was $7.6 million. Investments in partnerships totaled $94.5 million at June 30, 2013, $49.6 million of which consisted of investment partnerships and offshore funds which invest in risk arbitrage opportunities.

The following table provides a sensitivity analysis for our investments in equity securities and partnerships and affiliates which invest primarily in equity securities, excluding arbitrage products for which the principal exposure is to deal closure and not overall market conditions, as of June 30, 2013 and December 31, 2012. The sensitivity analysis assumes a 10% increase or decrease in the value of these investments (in thousands):

			Fair Value		Fair Value
			assuming		assuming
			10% decrease in		10% increase in
(unaudited)	Fair Value		equity prices		equity prices
At June 30, 2013:
Equity price sensitive investments, at fair value	$	256,417	$	230,775	$	282,059
At December 31, 2012:
Equity price sensitive investments, at fair value	$	273,271	$	245,944	$	300,598

Interest Rate Risk

Our exposure to interest rate risk results, principally, from our investment of excess cash in a sponsored money market fund that holds U.S. Government securities. These investments are primarily short term in nature, and the carrying value of these investments generally approximates fair value. Based on June 30, 2013 cash and cash equivalent balance of $222.8 million, a 1% increase in interest rates would increase our interest income by $2.2 million annually. Given that our current return on these cash equivalent investments is approximately 0.01% annually, an analysis of a 1% decrease is not meaningful.

Critical Accounting Policies and Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. See Note A and the Company's Critical Accounting Policies in Management's Discussion and Analysis of Financial Condition and Results of Operations in GAMCO's 2012 Annual Report on Form 10-K filed with the SEC on March 8, 2013 for details on Significant Accounting Policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of its business, GAMCO is exposed to risk of loss due to fluctuations in the securities market and general economy. Management is responsible for identifying, assessing and managing market and other risks.

Our exposure to pricing risk in equity securities is directly related to our role as financial intermediary and advisor for AUM in our affiliated open-end and closed-end funds, institutional and private wealth management accounts, and investment partnerships as well as our proprietary investment and trading activities. At June 30, 2013, we had equity investments, including mutual funds largely invested in equity products, of $272.7 million. Investments in mutual funds and closed-end funds, $55.5 million, usually generate lower market risk through the diversification of financial instruments within their portfolios. In addition, we may alter our investment holdings from time to time in response to changes in market risks and other factors considered appropriate by management. We also hold investments in partnerships which invest primarily in equity securities and which are subject to changes in equity prices. Investments in partnerships totaled $94.5 million, of which $49.6 million were invested in partnerships which invest in risk arbitrage. Risk arbitrage is primarily dependent upon deal closure rather than the overall market environment. The equity investment portfolio is at fair value and will move in line with the equity markets. The trading portfolio changes are recorded as net gain from investments in the condensed consolidated statements of income while the available for sale portfolio changes are recorded in other comprehensive income in the condensed consolidated statements of financial condition.

Item 4. Controls and Procedures

We evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2013. Disclosure controls and procedures as defined under the Exchange Act Rule 13a-15(e), are designed to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and regulations. Disclosure controls and procedures include, without limitation, controls and procedures accumulated and communicated to our management, including our Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), and Co-Chief Accounting Officers ("CAOs"), to allow timely decisions regarding required disclosure. Our CEO, CFO, and CAOs participated in this evaluation and concluded that, as of the date of June 30, 2013, our disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting as defined by Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Forward-Looking Information

Our disclosure and analysis in this report contain some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation: the adverse effect from a decline in the securities markets; a decline in the performance of our products; a general downturn in the economy; changes in government policy or regulation; changes in our ability to attract or retain key employees; and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. We also direct your attention to any more specific discussions of risk contained in our Form 10-Q and other public filings. We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements.

Part II: Other Information

Item 1.

Legal Proceedings

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to the repurchase of Class A Common Stock of GAMCO during the three months ended June 30, 2013:

					(c) Total Number of		(d) Maximum
	(a) Total		(b) Average		Shares Repurchased as		Number of Shares
	Number of		Price Paid Per		Part of Publicly		That May Yet Be
	Shares		Share, net of		Announced Plans		Purchased Under
Period	Repurchased		Commissions		or Programs		the Plans or Programs
4/01/13 - 4/30/13		8,737	$	48.27		8,737		607,030
5/01/13 - 5/31/13		54,271		52.15		54,271		552,759
6/01/13 - 6/30/13		18,718		56.50		18,718		534,041
Totals		81,726	$	52.73		81,726

Item 6.

(a) Exhibits

31.1

Certification of CEO pursuant to Rule 13a-14(a).

31.2

Certification of CFO pursuant to Rule 13a-14(a).

32.1

Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

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101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GAMCO INVESTORS, INC.

(Registrant)

By: /s/ Kieran Caterina		By: /s/ Diane M. LaPointe
Name: Kieran Caterina		Name: Diane M. LaPointe
Title: Co-Chief Accounting Officer		Title: Co-Chief Accounting Officer

Date: August 8, 2013		Date: August 8, 2013