Martin Whitman

Martin Whitman

Last Update: 03-16-2015
Related: Third Avenue Management

Number of Stocks: 38
Number of New Stocks: 0

Total Value: $1,889 Mil
Q/Q Turnover: 2%

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

Martin Whitman Watch

  • Can Marty Whitman's Third Avenue Get Back On Track?

    Legendary investor Marty Whitman, 90, is holding court in his office, wearing a blue sweatshirt and khakis, with his feet up on the coffee table. When the discussion turns to a topic he likes—how his form of value investing differs from the classic style of Benjamin Graham and David Dodd, say—his eyes flash and his whole face lights up. But he’s known as a curmudgeon for a reason, and when the subject is something he’d rather not discuss, he practically growls.


    There has been a lot to growl about lately. Third Avenue Management (Trades, Portfolio), the mutual-fund firm Whitman founded in 1986, has struggled with management turnover and poor performance. Assets have shrunk to $10.2 billion from a peak of $26 billion in 2006. The firm’s flagship fund, Third Avenue Value (TVFVX), which Whitman ran from its 1990 inception through 2012, now rates a meager two stars from Morningstar. It has just $2 billion in assets, and is on its second manager since his departure. Third Avenue International Value (TVIVX), which was already shrinking when longtime manager Amit Wadhwaney departed last year, lost more than 60% of its assets thereafter; it now has $269 million.

      


  • Martin Whitman Sells Holdings on Hong Kong Stock Exchange

    Many of the observers of the Hong Kong Stock Exchange say it is the world’s hottest exchange right now, and that is a hard point to dispute. The Hang Seng Index, which keeps track of daily movements of the largest companies in the exchange and is the primary indicator of the market’s track record, has been on a tear, and Hong Kong wants to raise the limit on cash flows from mainland China by 30% to keep pace with demand.


    Stocks are up 10.9% since March 27, when the exchange’s rules were eased.

      


  • Martin Whitman Adds to Holdings in Financial Services Companies

    Of the 20 stocks in which guru Martin Whitman (Trades, Portfolio) traded in January of this year, he added to his holdings in eight. There was no real pattern to Whitman’s stock buys – except for the facts that two were in the Banking sector, and they dwarfed all of Whitman’s other January purchases.


    Whitman’s investment in Comerica Inc (CMA), a financial services company that got its start in Detroit in 1849 and has been headquartered in Dallas since 2007, was his largest in terms of money spent on shares. Whitman bought 335,200 shares for an average price of $44.62 per share, bringing his stake to 2,152,239 shares and making it the 13th-largest by volume in his portfolio.

      


  • Guru Investors' Most-Bought European Financial Stocks

    While the financial crisis and macroeconomic headwinds have cast a shadow on the European banking sector, value investors at Oakmark in a memo today said they found select opportunities in the area based on their bottom-up research.


    “…We felt that banks with less capital-intensive businesses, such as asset management or advisory, would be attractive as they could more easily navigate these higher capital requirements,” wrote Jason Long, a partner at the firm. “We also believed that increased capital requirements would result in a lower return on equity, which we incorporated into our valuations. Also, it became evident that banks with strong deposit franchises and liquidity would have a funding cost advantage over wholesale-funded banks and be better positioned during times of crisis. Finally, we felt banks with significant scale would be able to deliver products and services more efficiently than their peers.”

      


  • Martin Whitman Adds to Stake in Michelin

    Once on the hit TV series “Happy Days,” Mrs. Cunningham had to fill in for her husband at his hardware store. I don’t remember why Mr. Cunningham needed her to run the store for him – perhaps he had to go on a business trip.


    Anyway, when he returned, he found that his wife had been running a sale on paint. Her asking price was ridiculously low, as I recall, and Mr. Cunningham was upset. He thought his wife had ruined his profit margin – until she explained her reasoning. On her trips to the grocery store, she had often seen potatoes priced very low, but they were placed next to the items that most people like to eat on a baked potato – butter, sour cream, bacon bits, chives, etc. – and those items were always marked up.

      


  • Martin Whitman's Top Growth Stocks

    Martin Whitman (Trades, Portfolio) of Third Avenue Value Fund is a contrarian investor who looks to invest in "safe companies that are cheaply priced."


    The business has to be easy to understand, have strong management, strong finances and strong a strong legal framework. The stock also has to be significantly discounted in relation to its intrinsic value while also having potential for attractive growth.

      


  • Martin Whitman's recent trades

    Martin Whitman (Trades, Portfolio) 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/

      


  • Martin Whitman's Third Avenue Management Q1 Shareholder Letter 2015

    Dear Fellow Shareholders:


    In guarding against market risk (security price fluctuations) and investment risk (events affecting the entity and the securities issued by the entity in which one has invested), the conventional wisdom, especially among financial academics, states that the market participant has to diversify. I believe that in a very important sense, recommending diversification is bad advice. Many of the most successful market participants concentrate, the exact opposite of diversifying. Those who concentrate include control investors, activist investors, most distress investors and first and second stage venture capitalists. Value investors, such as the Third Avenue Funds, who study companies and securities in depth, have considerably less need to diversify broadly than do conventional mutual funds and Exchange Traded Funds (ETFs) which do not study companies and securities but which, if they study anything concentrate on analyzing markets and security prices.

      


  • 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.  


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