Martin Whitman

Martin Whitman

Last Update: 2014-09-17
Related: Third Avenue Management

Number of Stocks: 37
Number of New Stocks: 2

Total Value: $2,072 Mil
Q/Q Turnover: 8%

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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The Value Conference in Review - Third Avenue Credit Team on Event Driven Investing
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Marty Whitman's Third Avenue Buys 2 Forest Products Companies Martin Whitman,Third Avenue Management - Marty Whitman's Third Avenue Buys 2 Forest Products Companies
Third Avenue Management (Trades, Portfolio) was founded by Marty Whitman in 1974 and now has teams of portfolio managers working on its portfolios. In its third quarter letter, managers said they were not having trouble finding good value investments in the strong markets. They wrote: More...

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Third Avenue Real Estate Value Fund Second Quarter 2014
Dear Fellow Shareholders, We are pleased to provide you with the Third Avenue Real Estate Value Fund’s (Fund) report for the quarter ended July 31, 2014. More...

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Third Avenue Small-Cap Value Fund Second Quarter Commentary
Dear Fellow Shareholders, More...

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Third Avenue Value Fund Comments on Weyerhaeuser Co
The Fund initiated a position in Weyerhaeuser (WY) as the company moved to finalize the distribution of its WRECO homebuilding subsidiary in an exchange offer with Tri Pointe Homes Inc. Weyerhaeuser is a Real Estate Investment Trust with wood products and wood fiber businesses, and the second largest owner of timberlands in the U.S. It is worth noting that Weyerhaeuser was sourced with TAM’s Real Estate team and is a solid example of the ability of the Fund to pull ideas from across the entire TAM research team. The Reverse Morris Trust distribution of WRECO was structured as an exchange offer, whereby shareholders could choose to accept shares in the new Tri Pointe, or to retain their interest in Weyerhaeuser. We chose not to indicate for Tri Pointe shares, and were pleased that the exchange offer was oversubscribed so that we retained our full position in Weyerhaeuser. The net effect of the transaction from our perspective was a resource conversion event in which WRECO was traded for a large repurchase transaction, representing roughly 10% of Weyerhaeuser shares plus $700 million in cash. More...

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Third Avenue Value Fund Comments on Apache Corporation
Apache (APA) is transforming its holdings from a diversified array of E&P assets to one that is more focused on unconventional onshore liquids plays. We expect the company to live within its cash flow, excluding the CAPEX required for its two liquid natural gas (LNG) projects, Wheatstone and Kitimat. Longer term, we think Apache will at least partially monetize LNG projects, which are operated by Chevron, to focus on higher return projects that support production and cash flow growth. Although not expected nor central to our investment thesis, the recent involvement from JANA Partners further validates our view that significant value remains under‐appreciated within Apache’s still fairly diverse portfolio of E&P assets. More...

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Third Avenue Value Fund Comments on Devon Energy Corp
Devon (DVN) has benefitted from the merger of Crosstex Energy with Devon’s midstream assets to form the EnLink MLP which strategically unlocked billions of dollars of value that was hidden in these assets. Devon now is focused on the development and optimization of its five premier asset plays, including its prolific Eagle Ford assets and its Permian basin acreage. These actions have transformed Devon from a primarily natural gas producer to a more balanced oil and gas company. More...

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Third Avenue Value Fund Comments on Encana
Encana (ECA) was a pure play natural gas company when fracking technology dramatically expanded the supply of natural gas on the North American market. The company initially struggled to optimize its capital allocation across a very broad portfolio of assets, concentrated on gas. Under the new leadership of CEO Doug Suttles, the company unveiled a strategic shift to focus on its five core liquids‐rich plays in North America. Suttles moved to monetize underutilized assets including the sale of the Jonah, Big Horn and East Texas properties for over $4 billion and focus on the highest return assets. More...

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Third Avenue Value Fund Comments on Intel Corp
A case in point is Intel (INTC), a well‐financed leader in designing and manufacturing microprocessor chips. We invested in Intel common stock early 2013 when the shares sold off meaningfully on investor fears of a poor near term outlook due to weak PC end‐user demand and general macro related weakness in IT spending. In our view, these shorter term, more macro related concerns were ignoring Intel’s solid franchise in microprocessors for PCs and servers, which it has continued to enhance through its technological and manufacturing leadership. While Intel faces challenges in trying to capture share in faster growing mobile markets, we believe that there is substantial value in its core businesses. There are reportedly some 600 million PCs that are four years old or older vs. typical replacement cycle at around three years. Given the proliferation of new applications, many of which require greater computing power, an upgrade of one's PC, particularly in the workplace, eventually becomes a necessity. For anyone who has experienced the frustration of trying to work on an older PC, watching the hourglass or equivalent More...

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Third Avenue Value Fund Comments on Comerica Inc
We have preferred regional banks for three reasons. First, at TAM we focus on price to tangible book value (P/TBV) as opposed to simple P/B. Tangible book value is a better measure of intrinsic value as it excludes intangible assets which wouldn’t carry much value in liquidation. As discussed earlier, one of the dimensions we focus on as we evaluate companies is the assets. The valuations of KEY and CMA are much closer to peers listed above on a P/TBV basis. Evaluating just a single statistic may provide misleading conclusions when evaluating an investment. Thus, we also consider how well a company can compound its book value over time. As seen in the table above, both KEY and CMA are generating higher returns on assets (ROA) than peers. This is important as companies that generate higher returns deserve premium valuations. Again, we distinguish among the many metrics. We focus on ROA as the measure of ROA does not favor companies that carry higher leverage and perhaps higher risk. More...

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Third Avenue Value Fund Comments on KeyCorp
We have preferred regional banks for three reasons. First, at TAM we focus on price to tangible book value (P/TBV) as opposed to simple P/B. Tangible book value is a better measure of intrinsic value as it excludes intangible assets which wouldn’t carry much value in liquidation. As discussed earlier, one of the dimensions we focus on as we evaluate companies is the assets. The valuations of KEY and CMA are much closer to peers listed above on a P/TBV basis. Evaluating just a single statistic may provide misleading conclusions when evaluating an investment. Thus, we also consider how well a company can compound its book value over time. As seen in the table above, both KEY and CMA are generating higher returns on assets (ROA) than peers. This is important as companies that generate higher returns deserve premium valuations. Again, we distinguish among the many metrics. We focus on ROA as the measure of ROA does not favor companies that carry higher leverage and perhaps higher risk. More...

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Third Avenue Value Fund Third Quarter 2014 Commentary Martin Whitman - Third Avenue Value Fund Third Quarter 2014 Commentary
Dear Fellow Shareholders, More...

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Martin Whitman Third Quarter Letter to Shareholders Martin Whitman - Martin Whitman Third Quarter Letter To Shareholders
Dear Fellow Shareholders, More...

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Why Gurus Are Buying AGCO?
Martin Whitman of Third Avenue Value Fund added 253,642 shares of AGCO Corp (AGCO) at an average price of $53.6. More...

LONG, FARM & CONSTRUCTION MACHINERY


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Third Avenue Management Comments on Toyota
Perhaps because it has "Toyota" (TM) in its name or perhaps because it spun out Toyota Motor years ago, many people view Toyota industries as largely an automotive parts type company. it is, but also derives around 50% of operating income from its material handling equipment business, where it is the global market share leader. The company also has a logistics segment and a textiles machinery business. The company is profitable and growing and, furthermore, has an attractive investment securities portfolio, the value of which exceeds Toyota industries' current market value. The businesses are separable but not likely saleable (perhaps if it were not a Japanese company). Changes in corporate governance are afoot in Japan. The government is working on new corporate governance rules requiring independent directors, or in the absence of that, an explanation of deviations. Further, Japan is working on a Stewardship Code to encourage institutional investors to disclose their proxy votes and engage in dialogue with companies on issues that could impact long-term share value. a new stock index, the JPX- Nikkei 400, highlights this new focus. More...

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Third Avenue Management Comments on Symantec
Symantec (SYMC) operates in security software and IT storage management businesses with its well-known brands, such as Norton. Recently, it has experienced management turnover, with its second CEO terminated by the Board in as many years. The surprise announcement was due to what appears to be slower than expected execution of a previously announced new strategy. The company had already started to embark on its new strategy to improve growth capabilities, including restructuring the sales force and eliminating duplicative organizational and operating structures. While not central to our original investment thesis, we have long thought that the company's businesses seem separable and saleable. Strategic firms could be potentially interested in its various businesses, though it could also be interesting to private equity firms given the strong cash flow characteristics of the business. More...

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Third Avenue Management Comments on Bank of New York Mellon
BNY Mellon (BK) ("BK") participates in two businesses –asset management and investment servicing. The company had $1.6 trillion in assets under management and $27.9 trillion of asset under custody and/or administration, as of March 31, 2014. The businesses seem separable and more valuable on a sum-of-the-parts basis. The asset management business with its iconic Dreyfus Funds and stable of boutique managers could certainly be a stand- alone entity or would seem to attract interest from strategic or financial buyers. BK has been in the news recently given more shareholder scrutiny of its operating efficiency. Recently, there have been news reports that BK could be looking to sell its Corporate Trust unit, which has been a detractor due to the run-off of high-margin securitizations. More...

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Third Avenue Management Comments on Cavco Industries
The Fund's largest position is the common stock of Cavco industries inc. (CVCO), which represented 5.6% of the Fund's net assets as of quarter end. Since Cavco is not a household name, we thought it would be helpful to discuss the history of the investment and why we are so excited about its future. The Cavco investment originated during the 2008 financial crisis. Fleetwood Enterprises, a leading producer of manufactured homes and recreational vehicles ("RVs") had filed for bankruptcy, and its announcement of the sale of its RV business in a bankruptcy auction indicated that the manufactured housing business could be available on similar terms. Fund Management had long followed the manufactured housing industry and knew that Fleetwood had a strong brand name and reputation as a quality manufacturer. Fund Management contacted Joe Stegmayer, the Chairman and CEO of Cavco, to discuss the situation and learned that Cavco was also interested in the Fleetwood manufactured housing business. Fund Management had known Joe Stegmayer for many years, dating back to when he was president of industry leader Clayton Homes, and had tremendous respect More...

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Third Avenue Management Comments on Chong Hing Bank Ltd
The majority, 77%, of the Fund’s Chong Hing (HKSE:01111) Common position was accepted for tender by Yuexiu Financial Holdings, part of the Yue Xiu Group, a Chinese company. As discussed in the 2013 year end letter, Fund Management was very pleased with the price of this transaction (2.4 times book value, including a special dividend), particularly considering that the shares had been purchased below book value. More...

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Third Avenue Management Comments on Vodafone
Additional shares of Vodafone (VOD) Common were purchased following the completion of the company's sale of its 45% stake in Verizon Wireless to Verizon. This transaction resulted in a significant distribution to shareholders consisting mostly of Verizon common stock and also of cash. Fund Management elected to sell the Verizon shares owing to concerns about slowing growth and increasing completion in the US along with the company's leveraged balance sheet. Vodafone has a very strong financial position and is well positioned to benefit from consolidation in the European telecommunication market and growth in emerging markets. Vodafone Common accounted for 2.5% of the Fund's net assets at quarter end. More...

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