Martin Whitman

Martin Whitman

Last Update: 2014-12-31
Related: Third Avenue Management

Number of Stocks: 38
Number of New Stocks: 6

Total Value: $2,059 Mil
Q/Q Turnover: 16%

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

Martin Whitman Watch

  • Martin Whitman's Third Avenue Buys 6 Stocks in Q4

    Martin Whitman (Trades, Portfolio) is the chairman of the board of Third Avenue Management (Trades, Portfolio), which seeks opportunistic investments. In his fourth quarter letter, Whitman highlighted the risk-aversion and emphasis on high-quality securities that characterize Third Avenue’s investing style:


    “One point about low turnover value mutual funds, such as those which are an integral part of TAM: an investor ought to look at more than past performance. Importantly, what kind of protections do funds, such as Third Avenue Value Fund provide against financial catastrophe? I think a lot. First, if the Fund’s portfolio consists largely of the common stocks of well-financed companies, bad times such as 2008 provide well-managed companies with opportunities to make highly attractive acquisitions of companies and assets such as was the case, among others, for Brookfield Asset Management and Wheelock & Company in 2008 and 2009. Second, most of the time, for most of the common stocks of companies held in the portfolio of any mutual fund, NAV will be higher in the next reporting period than it was in the prior period. This offers no guaranty of favorable market price behavior for the mutual fund, but it may tend to put the long-term odds in favor of good fund stock price performance.”

      


  • Third Avenue Adds to Portfolio-Leading Stake in Weyerhaeuer

    Guru Martin Whitman (Trades, Portfolio) founded Third Avenue Management (Trades, Portfolio), and its investment philosophy tends to reflect his. There is often overlap between Whitman's investments and Third Avenue's.


    “Macroeconomic influence and short-term price fluctuations are irrelevant when they do not affect intrinsic value,” Third Avenue’s website states, “since over the long run, we believe, the real value of our investments will manifest in our returns. … This fundamental conviction defines our singular investment culture, which was established and shaped by revolutionary value investor Marty Whitman.”

      


  • Weekly 3-Year Low Highlights: PKX, UTEK, LF, MVC

    According to GuruFocus list of 3-year lows; POSCO, Ultratech Inc, Leapfrog Enterprises Inc, and MVC Capital Inc. have all reached their 3-year lows.


    POSCO (PKX) reached $65.44

      


  • Third Avenue Value Fund Comments on CBS Corp

    Content Trumps Distribution at CBS (CBS)


    During the quarter the Fund initiated a position in CBS Corporation. CBS derives revenues from i) advertising on its owned and operated TV and radio networks, ii) content licensing and distribution and iii) affiliate and subscription fees (retransmission fees). The investment opportunity presented itself when shares sold off in the quarter, likely due to the unwinding of short-term event driven positions in the stock following the spin-off of its outdoor advertising unit, CBS Outdoors, and short-term concerns over a softer ad market.

      


  • Third Avenue Value Fund Comments on General Motors Co

    General Motors (GM): The Benefits of Looking Under the Hood


    GM, one of the largest automotive companies in the world, has been on the receiving end of much criticism over the last five years. So much so, that its stock price dropped to levels below its 2010 IPO of $30 per share. Much of this criticism has been well deserved. A high profile bankruptcy coupled with long-term pension woes have turned investors off from this company. GM further compounded its problems earlier in the year by getting embroiled in a high profile ignition recall scandal.

      


  • Third Avenue Value Fund Comments on Valmont Industries Inc

    The agricultural sector is another example of a fruitful area of idea generation for us over the past few years. Due to weather-related factors, the supply trends have been all over the board, creating high volatility in the stock prices of agriculture-related companies. The volatility in supply is countered by a very strong and steady demand. World population and income levels are growing, driving demand for beef and other protein products. As demand for protein grows, agricultural demand grows with it. At Third Avenue, we are attracted to those situations. Short-term dislocations can produce attractive prices, when the long-term trends are favorable. This means that on occasion we have the opportunity to acquire shares at a discount from our conservatively estimated NAV in the well capitalized companies that we consider to have the ability to compound their NAVs at double digit rates over time. We believe this combination has the potential to generate attractive returns for our shareholders.


    We discussed our investment in AGCO (AGCO), a manufacturer of agricultural equipment, in a recent shareholder letter. Another twist on this theme is irrigation. The largest user of freshwater is agriculture. Thus, irrigation demand is connected with the overall demand for food as the world population grows. It is also driven by water scarcity. Only 2.5% of the total worldwide water supply is fresh water and of that only 30% of fresh water is available to humans. Irrigation demand also stems from (i) conversion from flood based to mechanized irrigation, (ii) replacement demand for parts, and (iii) conversion of non-irrigated land. Mechanized irrigation can improve water application efficiency by 40-90% over traditional irrigation methods such as drip. During the quarter, the Fund acquired shares of Valmont Industries. Valmont is the leader in mechanized irrigation equipment with 40% market share.

      


  • Third Avenue Value Fund Comments on Weyerhaeuser Co, Canfor, and Cavco Industries

    For example, our investment in Weyerhaeuser, the largest held position at Third Avenue, is representative of our view of a strong US housing recovery, a view shared with and championed by our Third Avenue Real Estate team. Weyerhaeuser provides a compelling, yet not obvious, exposure to the US housing theme through its engineered wood products business, especially on the heels of the Weyerhaeuser Real Estate Company (WRECO) split off. In addition to Weyerhaeuser (WY), our holdings in Canfor (TSX:CFP) and Cavco Industries (CVCO) should benefit from a longer-term recovery in US housing. Canfor and Cavco are two well-capitalized and attractively priced companies involved in different points in the residential “value chain”. Cavco, a direct play on housing, is the second largest US producer of manufactured homes. Canfor is an integrated forest products company, focused primarily in lumber used to build houses. We started analyzing Canfor when doing our research on Weyerheauser as it is a competitor, but found its old growth log export market to Asia is very attractive.


    From Third Avenue Value Fund’s 4Q 2014 Portfolio Manager Commentary.

      


  • Martin Whitman 4Q 2014 Shareholder Letter

    Dear Fellow Shareholders,


    Efficient Market Theorists (EMTs) place a premium value on being ignorant about companies and the securities the companies issue. Such EMTs include most financial academics as well as promoters of Index Funds and Exchange Traded Funds (ETFs) such as John C. Bogle, founder of the Vanguard Group. For these EMTs, research is restricted to studying markets and security price fluctuations. To EMTs the study of companies and securities is someone else’s business.

      


  • Third Avenue International Value Fund Q4 Commentary

    Dear Fellow Shareholders,


    As you all well know, but it may be worth revisiting in the context of recent Fund performance, the Third Avenue International Value Fund (Fund) employs an opportunistic and long-term approach to fundamental value investing across international markets. The Fund has an unconstrained investment mandate which allows us to pursue what we believe are the best opportunities across geographies, industries and asset classes. We uncover each one of these opportunities by conducting thorough bottom-up company-specific research. The investments we select come together in a concentrated, high conviction portfolio, typically between 30 - 40 securities (vs. ~3000 stocks in the MSCI ACWI ex USA Index). It is natural, then, that our process results in a Fund showing minimal overlap with any broad market index. Many of our holdings are not part of an index at all and the Fund in aggregate has a 98% active share.1 Indeed, it is something of a rare occurrence for the Fund and an index to have similar characteristics or performance. Further, given a highly differentiated portfolio with minimal overlap with any index, it should not be surprising that high levels of tracking error, meaning periods of material outperformance and underperformance, have been the norm over the life of the Fund.

      


  • Third Avenue Small Cap Fund Q4 Commentary

    Dear Fellow Shareholders,


    I am honored to have taken the sole lead position on the Third Avenue Small-Cap Value Fund (Fund). My co-Portfolio Manager, Tim Bui, and I will continue to pursue the concentrated approach to value investing that has been the pledge of the firm since its founding. This vision for the Fund is rooted in Marty Whitman’s investment philosophy, which I embrace fully. Marty’s teachings have been an important influence on my own approach to investing.

      


  • Third Avenue Value Fund Q4 Portfolio Manager Commentary

    Dear Fellow Shareholders,


    On October 16, 2014, Third Avenue hosted its 17th Annual Value Conference. I would like to share some thoughts from a conversation that I had with our CEO, David Barse, which was part of the formal presentation schedule.

      


  • Marty Whitman's Third Avenue Funds Q4 Portfolio Manager Commentary

    Dear Fellow Shareholders,

    Efficient Market Theorists (EMTs) place a premium value on being ignorant about companies and the securities the companies issue. Such EMTs include most financial academics as well as promoters of Index Funds and Exchange Traded Funds (ETFs) such as John C. Bogle, founder of the Vanguard Group. For these EMTs, research is restricted to studying markets and security price fluctuations. To EMTs the study of companies and securities is someone else’s business. For EMTs, trying to conduct research on companies and securities is a waste of time and money. They believe that passive investors should hold funds having the lowest expense ratios in the form of ETFs and Index Funds which do not have to bear the expense of having to undertake fundamental research in depth. To prove that fundamental research is useless for passive market participants, EMTs correctly point out that no active investment vehicles (from Mutual Funds to ETFs) outperform a market or benchmark consistently. Consistently is a dirty word meaning all the time. Consistency is an absolutely phony test because it de facto imposes a short term investment horizon. The most any active investor (or any investor for that matter) can hope to achieve is to outperform (or at least equal the performance after fees) most of the time, on average, and over the long term. Some mutual funds, such as those managed by Third Avenue, are value funds where buy, sell and hold decisions are made based almost wholly on examining in depth companies and the securities they issue. Other mutual funds are run by high volume traders who place primary emphasis on forecasting near term market movements and near term security prices. Many value funds, including most of those managed by Third Avenue Management (Trades, Portfolio) (TAM), do outperform most of the time, on average, and over the long term as was demonstrated to investors at the October 2014 Third Avenue Value Conference. I do agree that the average mutual fund which concentrates on forecasting markets and security prices probably has a very tough time trying to outperform consistently. But those Funds are not TAM Funds.  


  • The Value Conference in Review - Third Avenue Credit Team on Event Driven Investing

    Watch the video here.


    At Third Avenue’s 17th Annual Value Conference, Third Avenue’s Credit team presented some of the very unique work they are doing in the event driven space, particularly within distressed credit and restructurings. The team walked us through their participation in the restructuring of five different companies in different countries and sectors: Ideal Standard, Codere, Energy Future Holdings, Momentive Performance Materials and 21st Century Oncology.

      


  • 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:  


  • 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.


    Portfolio Activity

      


  • Third Avenue Small-Cap Value Fund Second Quarter Commentary

    Dear Fellow Shareholders,


    We are pleased to welcome Chip Rewey to Third Avenue’s Small Cap team as a fellow shareholder and Co‐Lead Manager, working closely with Curtis Jensen. As outlined in Third Avenue Value Fund’s letter, Chip has also joined that team as Lead Portfolio Manager. These appointments not only speak to Chip’s decades of successful experience at like‐minded investment firms, but also to his embracing of a collaborative, team approach to investing, as well as to Marty Whitman’s time‐tested deep value philosophy. Chip evidences all the characteristics we seek in our teammates: an independent and curious mind; a high level of energy and a sense of urgency in a job that we are privileged to do every day. Chip’s addition will help us to build on the terrific momentum that this team has developed.

      


  • 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.


    We see the remaining businesses of Weyerhaeuser, led by CEO Doyle Simons, trading at a substantial discount to our estimated NAV combined with a solid outlook of secular growth, selfhelp margin improvement initiatives and a good way to gain exposure to a recovery in the U.S. housing market.

      


  • 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.


    From Third Avenue Value Fund’s Third Quarter 2014 Commentary.

      


  • 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.


    From Third Avenue Value Fund’s Third Quarter 2014 Commentary.

      


  • 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.


    From Third Avenue Value Fund’s Third Quarter 2014 Commentary.

      


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