Martin Whitman

Martin Whitman

Last Update: 06-30-2016
Related: Third Avenue Management

Number of Stocks: 35
Number of New Stocks: 1

Total Value: $1,203 Mil
Q/Q Turnover: 3%

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

Martin Whitman Watch

  • Third Avenue Management Comments on Brookdale Senior Living

    Brookdale Senior Living (NYSE:BKD) is the largest and best in class owner-operator of senior housing in the US.3 Brookdale also owns 399 high quality senior housing properties. We believe that these properties represent approximately 50% of the company’s asset value that the market is not currently recognizing. In addition to being a best-in-class operator with valuable hard assets, Brookdale has attractive long-term tailwinds from an ageing Baby Boomer population. Finally, Brookdale is well-financed. It has approximately $6.8 billion of mortgage debt and capital leases on an estimated asset value of more than $20 billion, making it very well-capitalized.

    Brookdale ran into two short term problems that have resulted in negative earnings revisions and a share price decline over the past six months. Brookdale merged with competitor Emeritus last year and integration issues have led to lower-than-expected occupancy, and high level executive turnover created uncertainty regarding the company’s ability to execute.


  • Third Avenue Management Comments on Covanta

    Covanta (NYSE:CVA) is a leader in providing waste to energy services. Covanta processes approximately 5% of the solid waste generation in the US annually and uses this waste to generate 10 million megawatt hours (MWh) of baseload electricity annually through 41 Energy from Waste (EfW) facilities in North America. The company also recycles 500,000 tons of ferrous and non-ferrous metals annually.

    Covanta shares weakened in 2015 due to the delayed start-up of the new Durham York EfW facility in Canada, as well as lower metals and electricity prices. Here too, these impacts caused short term earnings estimates to be revised modestly lower. We believe that these issues are short term in nature as the Durham York facility is set to begin operations in early 2016. Although metals and electricity prices are near cyclical lows and are likely to remain depressed in the near-term, two-thirds of Covanta’s revenue is derived from waste processing services where volume and pricing continues to grow and nearly half of Covanta’s electricity generation is contracted at above market rates through 2016, which provides significant earnings stability.


  • Third Avenue Management Comments on Comerica

    Comerica (NYSE:CMA) is the largest bank headquartered in Texas; it has a meaningful footprint in California and Michigan. Among the root causes of stock price dislocation was its exposure to Energy and low interest rates, which caused minor earnings per share estimate cuts for 2015. We believe those risks are mis-understood and overstated. While only 7% of CMA’s loan portfolio is linked to energy or “energy related” companies, it has been a source of investor scrutiny and confusion. Investors keep expecting net charge offs to rise, but they have remained marginal. Why? Comerica has an impressive underwriting history and we remain confident history will repeat itself. 95% of its energy loans outstanding are secured. Also, all underwriting decisions were based on “proved reserves” which should mitigate charge-off risk. Charge-offs will rise if the brutal decline in energy prices continues for extended periods of time, but we expect the risks to be manageable and much better than what is priced into the current stock price.

    Few banks would benefit more from a rise in interest rates than CMA as 85% of its loan book is floating rate. The Federal Reserve’s reluctance to raise rates has been frustrating, but it will come. When it does, it will have a material impact on CMA’s earnings power.


  • Third Avenue Management Comments on Weyerhaeuser

    Weyerhaeuser (NYSE:WY) is a well-capitalized US-based forest products company with high quality assets in the form of 7 million acres of timberland that form one of the most valuable privately owned timber portfolios. It also has a wood products business used in homebuilding and a cellulose fibers business with product used for absorbency in items such as paper towels.

    A number of macro headwinds negatively impacted Weyerhaeuser’s common stock price for the quarter: a decline in demand from China which led to pricing declines for Pacific NW logs, continued weak US housing markets which negatively impacted the wood products business, and port strikes and maintenance outages which disrupted the cellulose fibers business. These shorter term concerns did lead to earnings per share cuts for 2015. Despite these near-term macro headwinds, Weyerhaeuser is, in our opinion, well-positioned to compound NAV at a double-digit rate over the longer-term. First, Weyerhaeuser’s timberlands inventory, i.e., trees, are hard assets that can continue to grow; those that aren’t used this year continue to grow and become more valuable the following year. Second, we expect Weyerhaeuser’s cash flow and earnings to materially improve as US home starts recover from the cyclical downturn to more normalized levels. Further, the company has enhanced its timberlands portfolio and divested non-core businesses, cut costs and repurchased shares. While the ultimate timing of a housing recovery is unclear, we believe Weyerhaeuser will benefit when it does. In the meantime, given a 4% dividend yield, we added to our position on weakness in the quarter.


  • Third Avenue Value Fund 4th Quarter Portfolio Manager Commentary

    Dear Fellow Shareholders,


  • Marty Whitman's 4th Quarter Chairman Letter

    Dear Fellow Shareholders:

    At Third Avenue Management (Trades, Portfolio) (TAM), companies, the securities they issue, and their managements and/or control groups are appraised from three different angles:


  • Third Avenue's David Barse Discusses REITS and Interest Rates, Global Real Estate

    David Barse, CEO of Martin Whitman (Trades, Portfolio)'s Third Avenue Management (Trades, Portfolio), discusses with Bloomberg how an interest rate increase may affect real estate investment trusts. Barse also comments on portfolio holding Weyerhauser (NYSE:WY), a forest products company. Third Avenue had 12.1% of its equity portfolio invested in real estate at the end of the third quarter, with the largest trading in Hong Kong and Canada: CK Hutchison Holdings Ltd. (HKSE:00001), Brookefield Asset Management Inc. (TSX:BAM.A), Cheung Kong Property Holdings Ltd. (HKSE:01113) and Wheelock and Co. Ltd. (HKSE:00020).

  • The Best-Performing Stocks in Martin Whitman's Portfolio

    Martin Whitman (Trades, Portfolio) is founder and portfolio manager of the Third Avenue Value Fund (TAVFX). He manages a portfolio composed of 37 stocks in which two of them are new. The portfolio has a total value of $1,689 million.

    Third Avenue Value holds 2,082,168 shares of NVIDIA Corp. (NVDA), which has returned 58.5% since the beginning of the year. The stake represents 0.39% of outstanding shares of the company and 2.46% of the fund's total assets.


  • Martin Whitman's Presentation at Boston College

    The founder of value investing asset management company Third Avenue Management, Martin Whitman (Trades, Portfolio), gave a presentation at Boston College. Whitman is a legendary value investor who made a fortune investing in distressed debt situations.


  • Third Avenue Management Comments on Visteon

    Many people may remember Visteon (NYSE:VC) as the automotive parts company spun off from Ford that fell on hard times during the financial crisis. Today it is a much different company than the Visteon of yore. Given its “special situation” status, having over $60 per share in net cash and a stock price of roughly $100, the stock screened poorly on a statistical basis, enabling the Fund to acquire shares during the quarter at an attractive valuation of around 6.4 times pro forma adjusted EBITDA as the company continued on its transformational path. With its large net cash position, Visteon certainly meets our hurdle of a solid balance sheet. More excitingly, we think the transformation of the company has set it up to accelerate its book value compounding.


  • Third Avenue Management Comments on 1‐800‐

    Another company we purchased during the quarter is 1‐800‐ (800‐Flowers) (NASDAQ:FLWS). We can’t think of many better examples of a management team’s patience around investing than their recent acquisition of the iconic company Harry & David. Management studied the business for more than a decade and had multiple opportunities to purchase the asset at much higher prices. We see a fortunate parallel with our own approach to the company, having first met with the management when it was trading at significantly higher prices but patiently waiting for the right opportunity to invest. The opportunity came during the quarter when shares declined by nearly thirty percent, allowing us to invest at an undemanding valuation less than eight times EBITDA, with between 35%‐50% up to our valuation estimates.


  • Third Avenue Management Comments on EP Energy Corp

    As the energy markets churned weaker over the quarter, we continued to look for attractive investment opportunities, as it was our sense that many investors were shooting first and asking questions later on their sales. We continue to believe that the current price weakness is a supply driven shock, and not what we believe would be a more worrisome lack of demand driven sell off.

    The one‐two punch of higher Saudi Arabian production and potential future Iranian production have pushed oil down to the low $40 per barrel range, well below what we believe is a realistic industry wide break‐even level in the mid‐$60’s or higher, even with the benefit of recent service cost reductions that are likely not sustainable over time. In the near term we have seen a strong demand response in higher oil use and over the medium term we would expect a drop in production of higher cost barrels, which would reduce supply and lead to higher oil prices.


  • Marty Whitman's Third Avenue Buys 2 New Stocks, Adds to 6 in Q3

    Third Avenue Management (Trades, Portfolio)’s Third Avenue Value Fund purchased two new stocks in its third quarter ended July 31 and added to six existing holdings, managers disclosed Friday.

    The value fund is led by Chip Rewey, a speaker at the 2016 GuruFocus Value Conference, and is part of the group of funds composing the financial management company founded by investor Marty Whitman. The fund’s management has apportioned 26% of the portfolio to Financial Services, 15.5% to Consumer Cyclical and 14% to Basic Materials as its largest sector weightings. At third quarter-end, the portfolio contained 37 stocks with a value of $1.69 billion.


  • Top 5 Holdings of Third Avenue's Flagship Fund Manager Chip Rewey

    Chip Rewey, a GuruFocus Value Conference 2016 speaker, joined Third Avenue Management (Trades, Portfolio) in 2014 as lead portfolio manager for the value and small-cap funds and upholds many of the firm’s investing tenets as developed by founder Marty Whitman – centered on long-term factors including book value, creditworthiness and net asset value (NAV).

    “Our investment process is geared to identify good businesses that are led by strong management teams who are good capital allocators, along with a significant discount to a fair value in the market,” Rewey said in his third quarter letter. “Creditworthiness is the starting point for us when assessing any investment. Investing in well capitalized companies allows us to wait out earnings swings because we are confident our management teams will not be forced to do things that would hurt shareholder value to meet short-term financial considerations.”


  • GuruFocus Interview: Deep Value Investor Chip Rewey of Third Avenue

    When Marty Whitman stepped down in 2012 from managing the flagship Value Fund at his firm Third Avenue Management (Trades, Portfolio), it was during the midst of a difficult environment for deep value investors. Robert “Chip” Rewey now oversees the Value Fund and four others at Third Avenue and is staying true to Whitman’s style, which includes maintaining a concentrated portfolio with an eye towards long-term returns.

    Mr. Rewey recently took the time to answer questions from GuruFocus over email about topics ranging from his current holdings to book recommendations.


  • Third Avenue Value Fund Reports on Investment Insight in its 2015 Semi-Annual Report

    Martin Whitman (Trades, Portfolio) recently released his semi-annual shareholder report for the Third Avenue Value Fund which detailed the fund’s primary investment focus areas and notable trading activity for the first six months of the year through April 30, 2015.

    Martin Whitman (Trades, Portfolio) is the founder of Third Avenue Management (Trades, Portfolio). He is also chairman of the board and the firm’s lead portfolio manager. The Third Avenue Value Fund is also managed by Chip Rewey, Yang Lie, Michael Lehmann and Victor Cunningham. The Third Avenue Value Fund is an international portfolio focused on value stocks. It has two share classes, the institutional fund (TAVFX) and the investor fund (TVFVX).  

  • Martin Whitman Buys Three New Stakes

    Martin Whitman (Trades, Portfolio), founder and portfolio manager of the Third Avenue Value Fund, is known as a “buy and hold” value investor. He looks for businesses he understands that have strong finances and effective management with shares that are selling below intrinsic value.

    The performance of Third Avenue Value Fund suggests that his strategy is a sound one. In 2014, it recorded returns of 4.88%. In 2013, returns were nearly four times better than that (18.84%) and, in 2012, they were even better (27.48%).


  • Third Avenue Value Fund Invests in Homebuilding Companies During Q2

    Two of Third Avenue Value Fund’s three new holdings are in the homebuilding sector, reflecting the fund’s faith in the strengthening U.S. housing market.

    In the shareholder letter for the second quarter ended April 30, the portfolio managers wrote that a combination of favorable demographics, loosening financial constraints, and better economic trends will provide steady improvement for the housing market in the fund’s investment horizon.


  • Martin Whitman Recent Buy: Masco Corp

    Martin Whitman (Trades, Portfolio) is founder and portfolio manager of the Third Avenue Value Fund. 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.

    During 2015 Q2 the investor bought a big stake of Masco Corp (MAS) with an impact of 2.13% on his portfolio. He bought 1,479,930 shares that is the 0.43% of outstanding shares of the company. Since that buy, the price of the stock didn’t face any change.


  • Third Avenue Management Sells Stake in Target

    Third Avenue Management (Trades, Portfolio), the creation of Martin Whitman (Trades, Portfolio), is guided by current balance sheets, not projected future revenues and earnings, when making investment decisions. While many of the gurus we follow struggled in 2014, Third Avenue Management (Trades, Portfolio) enjoyed returns in positive territory (4.88%). Third Avenue’s returns in 2013 were even better (18.84%); the returns in 2012 (27.48%) were better still.

    Third Avenue Management (Trades, Portfolio) sold its stake in Target Corp (NYSE:TGT), the discount retailer based in Minneapolis, Minnesota. Third Avenue sold the 753,665 shares it acquired in the last two quarters of 2014 for an average price of $67.5 per share. The investment had a 42% IRR according to the firm's shareholder letter. 


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