"It's a big global leader in an economy-of-scale business," Hagstrom said. "More people are able to afford cell phones, and the models are carrying more and more features."
He also made money on the ADRs of the Vodafone Group of Britain, up 41 percent. Vodafone is one of the world's biggest wireless providers based on the number of subscribers.
"In technology and telecommunications, the biggest players are the winners because they have the ability to negotiate good deals with customers and suppliers," he said.
He said that he expected Vodafone and Nokia to gain significant numbers of customers, especially among 12-to-18-year-olds.
The fund's biggest holding is Nextel Communications. "The market mistakenly mispriced the security at the end of the second quarter, when it was down to about US$4 share," Hagstrom said. It ended 2002 at US$11.55.
He says he is bullish about this year.
"We recognize that some geopolitical risks need to be resolved," Hagstrom said. "After that, we believe the market will do substantially better going forward and the economy will pick up speed as companies are willing to hire more workers and increased capital spending."
The US$30 million Gabelli Blue Chip Value AAA fund took eighth place in the quarter with a return of 19.6 percent. But it fell 31.65 percent for the year.
"The stocks that led out of the third quarter were the ones that had taken it on the chin," said the fund's manager, Barbara Marcin, 45.
"Many companies were tremendously discounted because investors had a fear and loathing for any companies that they perceived to have any risk."
Marcin says she is a "core value investor."
"We look for companies with poor earnings or cash flow because of incorrect strategies or bad acquisitions that we expect to get back on their feet in the next one to three years," she added.
She also made money in Nextel, which she described as uniquely positioned among wireless companies because of its "push-to-talk" service, which essentially transforms cellphones into walkie-talkies.
Nextel is about six months to a year ahead of its competitors with that service, she said, so its earnings grew strongly in the last year while other companies' subscriber bases eroded.
Another winner was Hewlett-Packard, up 49 percent. Earnings and cash flow have steadily improved since the company's merger with Compaq last year.
"The multiple is beginning to expand as the luster comes back to Hewlett-Packard's image," she said, "as people see that Carly Fiorina is a quality CEO and the company has a lot of good products."
Marcin profited from the Sprint Group, which rose 59 percent. "It's a plain rebound story," she said, "because the company got very cheap in the third quarter."
Despite their strong fourth-quarter performance, Sprint and Hewlett-Packard were down for the year and are still undervalued, Marcin said.
Looking ahead, she says she expects the overall market to strengthen.
"There's a broad range of companies and sectors, like telecommunications and drug companies, that are trading at attractive historical multiples," she said.
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