Martin Whitman

Martin Whitman

Last Update: 2014-06-23
Related: Third Avenue Management

Number of Stocks: 38
Number of New Stocks: 1

Total Value: $2,092 Mil
Q/Q Turnover: 3%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Martin Whitman' s Profile & Performance

Profile

Martin Whitman is Founder and Portfolio Manager of the Third Avenue Value Fund (TAVFX). Whitman is a 1949 graduate of Syracuse University, which recently renamed its School of Management after Whitman, after a large gift from him in June 2003. He is an adjunct faculty member at Yale School of Management.

Web Page:http://www.thirdavenuefunds.com/

Investing Philosophy

Whitman is a "buy and hold" value investor. He buys stock in companies when he thinks that the company has strong finances, competent management, and the business is understandable. Also the company's stock must be cheap, meaning it trades at a significant discount to intrinsic value. The market price must lie substantially below a conservative valuation of the business as a private entity, or as a takeover candidate. He generally sells an investment only when there has been a fundamental change in the business or capital structure of the company that significantly affects the investment's inherent value, or when he believes that the market value of an investment is overpriced relative to its intrinsic value

Historical Allocation of Stock, Bonds, Cash

Total Holding History

Performance of Third Avenue Value Fund

YearReturn (%)S&P500 (%)Excess Gain (%)
201318.8431.55-12.7
201227.4815.412.1
2011-20.682.08-22.8
3-Year Cumulative20.2 (6.3%/year)55 (15.7%/year)-34.8 (-9.4%/year)
201013.8715.06-1.2
200944.5126.4618.0
5-Year Cumulative97.7 (14.6%/year)125.5 (17.7%/year)-27.8 (-3.1%/year)
2008-45.61-37-8.6
20075.765.610.2
200614.6915.79-1.1
200516.494.9111.6
200426.621214.6
10-Year Cumulative92.4 (6.8%/year)104.1 (7.4%/year)-11.7 (-0.6%/year)
200310.4628.7-18.2
20027.13-22.129.2
200110.82-11.922.7
20000.91-9.110.0
199910.0621-10.9
15-Year Cumulative180.3 (7.1%/year)98.3 (4.7%/year)82 (2.4%/year)
199816.7228.6-11.9
1997-5.0333.4-38.4
199611.0223-12.0
19952.3637.6-35.2
1994-3.221.3-4.5
20-Year Cumulative241.7 (6.3%/year)483.2 (9.2%/year)-241.5 (-2.9%/year)
19931.3610.1-8.7
199210.887.63.3
1991-0.2630.5-30.8

Top Ranked Articles

Marty Whitman’s Conviction in Ambac is Working out; Still waiting for MBIA and Radian Group?
Legendary investor Marty Whitman’s purchases of bond and mortgage insurers Radian (RDN), Ambac (ABK) and MBIA (MBI) have been very controversial, and widely discussed. Watching an investment plunging 95% and continuing to buy more, what kind of conviction does that need? Read more...
Clash of the Titans: Martin Whitman Versus Bruce Greenwald
Marty Whitman is truly a living legend in the world of value investing. It is always a pleasure to read and find great investing insights from his letters. Here in this letter from the year 2001 he reflects on "net nets" and investing practiced in the real world, as opposed to what is taught in the business schools. The concept of Net-Nets was invented by Graham and Dodd and is very rarely found in the present markets, however Marty Whitman refined this definition to the next level. He explains that for a retailer it's inventory which is considered to be a current asset, is in fact a fixed asset of the worst type and it cannot stay in the business without maintaining a certain level of inventory. However, for a company which owns some real estate and has triple A tenants with long term leases in class A office buildings it can sell the properties or refinance them. It may be called a fixed asset, but it is much more current asset than a retailer's inventory. Using this definition one can find companies trading below their net current assets. Read more...
Stock Market Valuation June 2, 2011
I find the current valuations astonishing. No I am not refering to linkedin or Groupon or the high fliers. The overall market is so overvalued considering the macro picture. I am not a macro investor, but Wall Street is. It makes no sense for the Shiller PE to be at 23 (an earnings yield of 4.3%), when the deficit is out of control, there is inflation accross the board except Real estate (the one asset class QE2 was really supposed to help!), housing is in a double dip, unemployment cannot come down for years unless there is job growth of 500k a month (close to impossible). Additionally, the Euro zone is experiencing a big crisis, Japan suffered a catastrohpic humanitarian and economic disaster, and countries like China are starting to get nervous about over heating in their economies. Read more...
Stock Market Valuation: April 3, 2011
The current level of the S&P500 is 1,332, and the Dow is at 12,377--nearly unchanged from last month. As evidenced below, market valuations did not change much over the last month. Read more...
Stock Market Valuation May 2, 2011
The current level of the S&P500 is 1,364, and the Dow is at 12,811–higher than last month, but valuations remained overall the same. As evidenced below, market valuations did not change much over the last month. I update market valuations on a monthly basis. The point of this article is to measure the stock market based on seven different metrics. This article does not look at the macro picture and try to predict where the economy is headed. It only uses these several metrics which have been very good past indicators of whether the market is fairly valued. Read more...
» More Martin Whitman Articles

Commentaries and Stories

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Third Avenue Management Comments on Prosperity Bancshares
The addition of Prosperity Common expanded the Fund’s bank basket to six holdings. Houston-based Prosperity Bancshares (PB) is a bank holding company operating with a traditional community banking mindset, a far cry from the behemoth money center banks that have been exposed as too big to manage, too big to regulate and just plain too conflicted. it appears that management runs a tight ship: the company has been profitable every year since its formation, even during the massive economic downturn in Texas in the late 1980’s and during the 2008/2009 financial crisis. Historically the company has grown by making opportunistic acquisitions of banks and branches around Texas. During 2008, for example, the bank acquired $3.6 billion of deposits and certain assets of Franklin Bank from the Federal Deposit insurance Corporation, as receiver. Management’s wellmanaged, bolt-on acquisition strategy along with superb efficiency and conservative underwriting have produced an enviable track record, with adjusted book value1 compounding at mid-teens rates over the past five, ten and fifteen years. Our analysis suggests that management has an ample runway to continue doing more of the same. More...

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Third Avenue Management Comments on Actuant
We view Wisconsin-based Actuant (ATU) as an industrial “miniconglomerate” distinguished by its operational strength, broadly respected brands and deep distributor relationships. Historically acquisitive, the company manufactures highly specialized industrial products, everything from hydraulic tools for the construction, rail and power generation industries, to pipeline connectors and concrete tensioners for the oil and gas industry, to smaller motion control systems used by truck, auto andWe view Wisconsin-based actuant as an industrial “miniconglomerate” distinguished by its operational strength, broadly respected brands and deep distributor relationships. Historically acquisitive, the company manufactures highly specialized industrial products, everything from hydraulic tools for the construction, rail and power generation industries, to pipeline connectors and concrete tensioners for the oil and gas industry, to smaller motion control systems used by truck, auto and agricultural vehicle Original Equipment Manufacturers (“OEMs”). Management’s efforts to diversify the business have expanded the company’s presence into 30 countries, dampened the cyclicality of many More...

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Marty Whitman's Q2 2014 Third Avenue Letter - High Frequency Trading
Dear Fellow Shareholders: High Frequency Trading ("HFT") has been on the front pages of the financial press ever since the publication earlier this year of Michael lewis' book, Flash Boys. The book demonstrates once again how difficult it is to prosper as an investor in markets where longer-term fundamental analysis of companies and securities are ignored. The ways most market participants who lack specific knowledge about individual companies and the securities they issue can prosper seems to encompass at least one of the three factors: More...

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Third Avenue Management - The Tapering Rate of Interest in Tapering
Overview More...

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Third Avenue Management Comments on Nintendo
During the quarter, we trimmed several positions that had appreciated, particularly in financial services, and eliminated the Fund's position in Nintendo Common (OSE:7974). During the year and a half in which we owned nintendo Common, the business performance was poor while the stock performance was strong. Therefore, we elected to sell and lock-in our 30% return, rather than wait for a turnaround which, while possible, will be challenging. More...

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Third Avenue Management Comments on Kurita Water Industries Ltd.
We also initiated a position in the common stock of Kurita Water Industries Ltd. ("Kurita") (TSE:6370), a Japan-based provider of water treatment chemicals, facilities and maintenance. Kurita's business is currently depressed, as many of its Japanese electronics customers have been struggling and the company has experienced cost over-runs as part of its recent international expansion efforts. nevertheless, Kurita has remained profitable and generated positive free cash flow despite the challenging industry environment. The company is well positioned, with a debt free and cash rich balance sheet. This financial flexibility will allow for the continued international expansion efforts. The management team has a good long-term track record, having operated the business profitably in each of the last ten years. Additionally management is much more shareholder friendly than most Japanese companies, as evidenced by a history of share repurchases (7% of the outstanding shares since 2011) and a dividend increase in each of the last ten years. Kurita common was purchased at a slight premium to book value and about a 7.5% free cash flow yield. Cash and marketable short-term investments account More...

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Third Avenue Management Comments on Michelin
We initiated a position in the common stock of Compagnie Generale des Etablissements Michelin SCA ("Michelin") (XPAR:ML) during the quarter. This purchase added to the Fund's growing exposure to European Blue Chip common stocks, which we discussed in last quarter's letter. Other recently initiated European Blue Chip common stock positions include Total, Pargesa and Vodafone. Each of these companies has a very strong financial position, capable management team, healthy growth prospects and a common stock selling at a meaningful discount to our estimate of net asset value with a mid-single digit dividend yield. More...

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Martin Whitman’s Third Avenue Management First Quarter Stock Buys Martin Whitman,Third Avenue Management - Martin Whitman’s Third Avenue Management First Quarter Stock Buys
Martin Whitman (Trades, Portfolio)’s Third Avenue Management (Trades, Portfolio) team mostly seeks companies trading at discounts to their net asset values (NAV) between 25% and 75%, which are well financed and have excellent growth records. Companies of the Dow Jones Industrial Average (DJIA), Whitman notes in his first quarter 2014 letter released today, cost $2.76 for each $1.00 of corporate net assets. His funds’ portfolio companies, by contrast, cost $0.25 to $0.75 for each $1.00 of corporate assets. “This discrepancy makes no economic sense except that the discounts have always existed for the More...

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Marty Whitman's Third Avenue Management First Quarter 2014 Letter
Dear Fellow Shareholders: Much emphasis is placed on general "debt levels" in the belief that the amounts borrowed by u.S. Federal, State and Local governments are excessive. Indeed, 74% of recent poll 1 respondents stated that a high priority ought to be given to debt reduction by governments. More...

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Martin Whitman’s Third Avenue Value Fund’s Top Five Year-End Stocks Martin Whitman,Third Avenue Value Management - Martin Whitman’s Third Avenue Value Fund’s Top Five Year-End Stocks
Martin Whitman, the chairman of the board at Third Avenue Asset Management, made a relatively early release of his fund’s third quarter portfolio this week. While Whitman no longer manages the funds at Third Avenue, he continues to write the shareholder letter each quarter. Third Avenue focuses on valuing its stocks from the bottom up, focusing on the “creditworthiness,” the ability for the “issuer to grow net asset value (NAV)” and the stock’s price in relation to its NAV. More...

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Martin Whitman's Third Avenue Management - New Buys and Adds Martin Whitman,Third Avenue Management - Martin Whitman's Third Avenue Management - New Buys And Adds
In his annual letter to shareholders, Martin Whitman of Third Avenue Funds railed against Modern Capital Theory (efficient market theory), arguing instead that it is possible to outperform markets by bottom-up analysis of businesses and the securities they issue. He also listed four characteristics that define a Third Avenue Funds portfolio holding: More...

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Martin Whitman Comments on Twitter
Twitter (TWTR) went public November 7, 2013 at $26 per share. On the first day of trading, Twitter Common closed at $45.90.There are obvious benefits to being an early IPO investor, assuming you can get a position size large enough to make a difference to a portfolio's over all return. Even these investors, however, achieved returns orders of magnitude lower than those obtained by Twitter's early investors and its most senior employees. The prospectus discloses, inter alia that 42,708,824 options on common shares, exercisable at an average price of $1.84 per share, were outstanding on June 30, 2013. On occasion, Third Avenue's funds can attempt to recreate this type of scenario by participating in a capital raise or refinancing (see the Third Avenue Real Estate Fund's investment in Trinity Place Holdings, discussed in that team's fourth quarter 2013 letter) but mostly we seek to create the possibility of achieving outsized returns by purchasing undervalued securities in the open market. More...

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How Do Good and Financially Sound Companies Become Cheap - Amit Wadhwaney of Third Avenue
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Give the Gift of Value - Holiday Gift Ideas for the Should-Be Investor Seth Klarman,Martin Whitman - Give The Gift Of Value - Holiday Gift Ideas For The Should-Be Investor
We are now in the heart of the holiday gift-buying season and finding that perfect gift for the investors on your list can be daunting. More...

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Marty Whitman's Third Avenue Fourth Quarter Portfolio Manager Commentary
Dear Fellow Shareholders: Academics involved with finance restrict their studies to analyzing markets and securities prices. As far as they are concerned, the study of companies and the securities they issue are someone else's business. I am disappointed that a Nobel Prize was awarded to Eugene Fama, who studies only markets and prices; and whom, I daresay, does not focus on Form 10-Ks or the footnotes to a corporation's audited financial statements. In fact there is no way of determining whether any market is efficient or not in measuring underlying values unless the analyst understands, and analyzes, the specific securities that are the components of that specific market. More...

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HAR, AMAT, KEY, FCE.A - Third Avenue Management Sells in Review
The updated portfolio of Third Avenue Management, founded by value investor and Guru Martin Whitman, includes 163 stocks, 24 of them new, a total value at $5.17 billion, and a quarter-over-quarter turnover of 9%. The portfolio is currently weighted with top three sectors: financial services at 18.1%, basic materials at 16.1% and real estate at 15.1%. The stocks bought by Third Avenue Management in the past 12 months have an average return of 11.65%. More...

SEMICONDUCTOR EQUIPMENT & MATERIALS, BANKS – REGIONAL – US, REAL ESTATE – GENERAL, CONSUMER ELECTRONICS


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Gurus Hold Lows - Manufacturing Suffers Shutdown Backlash Jim Simons,Martin Whitman - Gurus Hold Lows - Manufacturing Suffers Shutdown Backlash
Although it’s still difficult to gauge the aftershock, American factories are already feeling the backlash of the U.S. government shutdown, and the country’s manufacturing output has dropped for the first time in four years, according to Reuters. GuruFocus research shows that billionaires are avoiding most of the current lows of the manufacturing world. But here’s a look at three companies in the U.S. manufacturing sector, as revealed by the GuruFocus 52-week low screener, showing companies hitting new lows and are still held or recently sold by top investors and insiders. More...

HOME FURNISHINGS & FIXTURES, APPAREL – MANUFACTURING


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Martin Whitman Sells and Reductions in US, Tokyo and Hong Kong Markets Martin Whitman - Martin Whitman Sells And Reductions In US, Tokyo And Hong Kong Markets
Guru Martin Whitman’s Third Avenue Value Fund portfolio update lists 37 stocks, three of them new, and a total value of $2.29 billion. The fund’s quarter-over-quarter turnover is 8%. The portfolio is currently weighted by sector with financial services at 26.3%, real estate at 26.3% and technology at 12.4%. Guru Whitman has averaged a return of 5.15% over 12 months, and Third Avenue Management has averaged a return of 7.97% over 12 months. More...

REAL ESTATE – GENERAL, BANKS – REGIONAL – US, ASSET MANAGEMENT, SEMICONDUCTOR EQUIPMENT & MATERIALS, CREDIT SERVICES, AUTO MANUFACTURERS


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Third Avenue's Third Quarter Top Stocks
Martin Whitman, the chairman of the board at Third Avenue Asset Management, made a relatively early release of his fund’s third quarter portfolio this week. While Whitman no longer manages the funds at Third Avenue, he continues to write the shareholder letter each quarter. Third Avenue focuses on valuing its stocks from the bottom up, focusing on the “creditworthiness,” the ability for the “issuer to grow net asset value (NAV)” and the stock’s price in relation to its NAV. More...

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Third Avenue Management Comments on Taylor Wimpey
Our current investment in Taylor Wimpey (LSE:TW), the U.K. homebuilder, illustrates several additional ways that accounting figures can be misleading. We first bought shares of Taylor Wimpey in April 2011, in the midst of a severe U.K. housing depression. The company had been producing enormous accounting losses, as its land holdings were being written down to values reflective of the economic depression in which the auditors were assessing the values. Meanwhile, the company also found itself selling houses at depressed prices built on land that had been purchased in years prior at much higher costs. On the face of it, the accounting statements were ugly. While Taylor Wimpey was forced to make downward accounting adjustments to its asset base, it owned the same amount of property within its land bank both before and after the write downs.The accounting losses at that time did not, in our minds, reflect the long-term economic reality of the business. As we look at Taylor Wimpey's financial statements today, the stock having nearly tripled from our cost, the company is producing record profit margins.The large profit margins are, in part,enabled by current high house prices in the U.K., More...

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