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 Watch

  • Valuation of Martin Whitman’s Four New Buys

    Martin Whitman is in the process of handing the reigns over to his successor at $3.8 billion Third Avenue Management, Ian Lapey, who was promoted to sole portfolio manager on March 1, 2012. Whitman remains as chairman of the board of trustees and mentors the investor team. Year to date, the fund has returned 12.68%, recovering from its 11.68% downturn in the last year.

    The investors in the third quarter bought four new stocks: Devon Energy (DVN), Comerica Inc. (CMA), Alleghany Corp. (Y) and White Mountains Insurance Group (WTM).  


  • Third Avenue Value Fund Buys Devon Energy, Comeric, Applied Materials, Alleghany, White Mountains Insurance

    Third Avenue Value Fund was founded by legendary value investor Marty Whitman, who has recently retired. The fund is now managed by his successor Ian Lapey. Ian Lapey is also co-manager of the Third Avenue Value Fund UCITS for offshore investors. He joined Third Avenue in 2001. Ian Lapey has put his marks on the fund quickly. He initiated a few new positions that are mostly based in the U.S., while Marty Whitman put most of his assets in Hong Kong real estate companies. He initiated positions in oil and gas E&P, property & casualty insurance and high tech companies. In his shareholder letter, Ian Lapey detailed what he looks for in property & casualty insurance companies:

    [list]
  • 1. Strong financial positions at both the operating companies and holding company, including AM Best ratings of at least A-.  


  • Third Avenue Management Comments on Cloud Peak

    From Third Avenue Management's second-quarter letter:

    In a beleaguered industry, Cloud Peak (CLD) seems to stand apart from its peers on several fronts. Its three non-unionized surface mining operations, which produce low sulfur coal, are located in the Powder River Basin of Wyoming and Montana and boast one of the lowest cost positions in the industry. Additionally, Cloud Peak's Spring Creek mine enjoys Canadian port access that connects it to growing Asian markets5, where coal consumption is expected to grow rapidly. Admirably, Cloud Peak's management team has maintained a strong financial position and has not followed its competitors by expanding through large acquisitions, moves that have saddled a number of the largest players with weakened balance sheets (implicitly strengthening Cloud Peak's hand). Its attractive valuation, equating to less than four times estimated 2012 EBITDA or $0.90 per ton of reserves, is well below private market values we estimate to be in excess of $1.50 to $2.00 per ton. Customer contracts equate to almost all of 2012 production and the majority of that for 2013, ensuring some cash flow stability and affording a comfortable degree of downside protection. While the contracts may become negotiable, they do provide a reasonable enough runway and timeframe for energy markets to balance. Additionally, though the company carries a net debt position, it faces no debt maturities until 2017.  


  • Third Avenue Management Comments on Comerica

    From Third Avenue Management's second-quarter letter:

    During the quarter, we added to our existing position in Key Common and initiated a new position in Comerica Common (CMA). At quarter end, the two positions accounted for 3.4% of the Fund's net assets. Comerica Common was identified by Vic Cunningham. Comerica Incorporated is a financial holding company based in Dallas with subsidiaries engaged in retail and business banking and wealth management. The management team, led by Chairman and CEO Ralph Babb, has an impressive longterm track record, having avoided many of the consumer related problem areas in 2007 and 2008. As a result, the company's tangible book value is roughly flat compared to five years ago, a considerable accomplishment in light of the financial crises. The current earnings outlook is subdued owing to depressed net interest margins (3.2%, versus 3.6% to 4.0% historically) and tepid loan growth (2% in the first quarter). Nevertheless, the company appears poised to generate improved returns over the next several years, owing to its low cost deposit base, strong business lending franchise in its core markets (Texas, Michigan, California and Florida) and strong capital position (10.3% Tier 1 Capital ratio). The company recently passed the Fed's Comprehensive Capital Analysis and Review ("CCAR") stress test and was approved to repurchase $375 million in stock (about 6% of the company's outstanding shares) over the next year. The Fund's initial position in Comerica Common was acquired at about 13 times earnings and a slight discount to tangible book value.  


  • Third Avenue Management Comments on Applied Materials

    From Third Avenue Management's second-quarter letter:

    In March, I attended the Applied Materials (AMAT) investor meeting in New York along with my colleague Yang Lie, who has followed Applied Materials and other technology stocks since joining the firm in 1996. Applied Materials' Chairman and CEO Mike Splinter, along with several other members of the senior management team, presented a compelling long-term investment case for the company, which is the leading global provider of semiconductor capital equipment, driven by increasing consumer demand for mobility. While it is difficult to predict who will produce the next top-selling consumer electronics gadget (although the odds appear to favor Apple at the moment), it seems to be a safe bet that the demand for equipment and services provided by Applied Materials should increase, given its market dominance in many areas of semiconductor equipment, as semiconductor chips become more ubiquitous and more complex, necessitating a greater number and more advanced tools.  


  • Third Avenue Management Comments on White Mountains Insurance Group

    From Third Avenue Management's second-quarter letter:

    We also initiated a position in the common stock of White Mountains Insurance Group Ltd. (WTM), a Bermuda-based holding company whose principal businesses are conducted through property and casualty insurance and reinsurance subsidiaries. White Mountains Common was recommended for investment last year by John Mauro, a research analyst on Third Avenue's international team, when the company announced the sale of its Esurance subsidiary at a terrific price (about 2.5 times tangible book value) to the Allstate Corporation. White Mountains Common was subsequently purchased in the Third Avenue International Value Fund and discussed in that fund's July 31, 2011 shareholder letter. Impressively, White Mountains' tangible book value has increased at about 15% per year since 1985, with much of the growth driven by timely resource conversion activity (e.g., buying and selling of businesses), such as the recent Esurance sale.  


  • Third Avenue Management Comments on Alleghany Corp

    From Third Avenue Management's second-quarter letter:

    We initiated a position in Alleghany Common (Y), which was purchased in TASCX and discussed in last quarter's TASCX shareholder letter. Curtis Jensen and I attended a lunch with a small group of investors and Alleghany's CEO, Weston Hicks, in April. Weston seems to be our type of CEO: he is non-promotional and focused on generating shareholder value by growing book value per share. The company has no dedicated investor relations person and does not do quarterly earnings calls, but instead provides comprehensive financial disclosures aimed at enabling long-term investors, as opposed to short-term speculators, to make informed investment decisions. Weston's presentation to investors consisted of a one page Excel spreadsheet showing the company's performance since 2002, when he joined the company. Over this period, the company's average combined ratio was 90% (i.e., a 10% underwriting profit margin), and book value per share increased at a 9% compounded annual growth rate ("CAGR"). This growth was particularly impressive given the difficult underwriting environment over the period with competitive pricing and an elevated level of insured losses.  


  • Third Avenue Management Comments on Devon Energy Corp

    From Marty Whitman's second quarter 2012 letter:

    As discussed in last quarter's letter, a new position was initiated in Devon Common (DVN). We added modestly to the position this quarter. Devon Energy Corp. is an Oklahoma-based oil and gas exploration and production company. In April, I attended the presentation of Devon's CEO, John Rickels, at the IPAA Oil and Gas Investor Symposium in New York City. The highlight was the company's discussion of its long-term growth outlook: production is projected to increase from 240 million barrels of oil equivalent ("BOE") in 2011, to 340 million BOE by 2016, representing a 7% annual growth rate. This growth is projected to be driven by high margin oil and natural gas liquids ("NGLs") annual growth of 16% to 18%, while natural gas production declines slightly. The company should retain a very strong financial position throughout this period, as most of the growth is expected to be funded by operating cash flow (the company expects to use only $1.5 billion of its $7 billion in cash over this period).  


  • Marty Whitman's Successor Ian Kapey Discusses Third Avenue Portfolio and Investment Strategy

    Third Avenue Value manager Ian Lapey talks about some of the changes he's made at the fund since taking full control while staying clear of a benchmark.

    This is what he said on what changes he is making after taking over the baton from legendary investor Marty Whitman.  


  • Marty Whitman: How Cash Can Be Used Most Productively by Corporations

    This is the latest commentary from legendary value investor Marty Whitman.
    ____________  


  • Third Avenue Funds Martin Whitman Third Quarter Letter

    Dear Fellow Shareholders:

    Throughout the years, I have frequently written about the great emphasis the Third Avenue Management ("TAM") investment team places on the quality and quantity of a company's resources when evaluating a potential investment. Put simply, most of the time, we seek to invest in the equity securities of companies with lots of cash and little, or no, debt. This quarter, I thought it might be of interest to my fellow shareholders to expand upon our thoughts on how cash can be most productively used by corporations.  


  • Marty Whitman's Third Avenue Management First Quarter Investor Letter

    In his first quarter letter for the period ending Jan. 31, 2012, Marty Whitman discusses the primacy of fundamental analysis in investing and hands the reigns over to his successor, though he says he will remain as chairman of the board for Third Avenue Management:

    Dear Fellow Shareholders:  


  • One-Upping Warren Buffett - Best, Worst and Next Stocks from Third Avenue's Ian Lapey

    The web is littered with lists, boasts from every corner, each claiming to be the penultimate collection of tips, tricks, lessons, and laws. Smart investment is driven by experience and data, and you often have to navigate through the digital debris to find good advice. But mistakes are just as instructive. Smart people are never entirely immune to bad judgment. So we are offering a new monthly series—My Best, My Worst, My Next—which offers three personal anecdotes from world-class investors. We hope to guide you towards success, warn you away from failure, and provide an advanced peek at the future.Confused by market-timing gurus divided over whether we are in for a major correction or the bull has further to run? Value investor Ian Lapey, a protégé of legendary investor Marty Whitman and co-manager of Whitman’s flagship Third Avenue Value Fund, looks solely at company balance sheets. Here are his best, worst and next picks.

    MY BEST: Tripling the Money   


  • Marty Whitman's Latest Buys and Adds: HUWHY.PK, TLAB, AMAT

    Marty Whitman, chairman of Third Avenue Management, is a bottom-up, value-oriented investor. He seeks companies with strong finances, competent management, and easily understandable businesses. He is also a long-term, buy-and-hold investor who buys companies selling at a discount to inherent value. He has a 91.5 10-year cumulative return, versus 16.4% for the S&P.

    He initiated one new position and added to two existing positions in the quarter ended Oct. 31, 2011: Hutchison Whampoa Ltd. (HUWHY.PK), Tellabs Inc. (TLAB) and Applied Materials Inc. (AMAT).  


  • Third Avenue Value Fund Buys Tellabs Inc., Applied Materials Inc., Carver Bancorp Inc., Sells Brookfield Asset Management

    Legendary value investor Martin Whitman’s Third Avenue Value Fund reported their portfolio of Oct. 31, 2011. The fund has been buying tech stocks, too, like many other value investors. The fund buys Tellabs Inc., Applied Materials Inc., Carver Bancorp Inc., sells Brookfield Asset Management during the 3-months ended 10/31/2011, according to the most recent filings. As of 10/31/2011, Third Avenue Value Fund owns 45 stocks with a total value of $3.3 billion. These are the details of the buys and sells.

    For the details of Martin Whitman's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=Martin+Whitman  


  • Third Avenue Management Stategies and their top holdings

    Third Avenue Management is an investment management firm launched in 1990 by veteran value investor Martin J. Whitman. Whitman is considered to be a “career investment banker and turnaround specialist” with an educational background hailing from Syracuse University. Furthermore, Whitman holds a master degree in economics, is a recipient of the coveted CFA designation, and author of The Aggressive Conservative Investor, Value Investing: A Balanced Approach, and Distressed Investing: Principles and Technique. Symbolically represented by a New York Elevated Train logo, it serves as homage to the value philosophy of the firm as the El train historically cost a dime to travel from borough to borough in New York City. Third Avenue offers several different products to investors, from the classical value fund, to more exotic funds such as focused credit funds. Nonetheless, the flagship and originating fund of the firm is the Third Avenue Value Fund (TVFVX).  


  • Martin Whitman Buys Tellabs Inc., Sells Nabors Industries Ltd., Brookfield Asset Management

    Legendary value investor Martin Whitman reported his third quarter portfolio. Marty Whitman uses a bottom-up, value oriented approach to analysis. He seems to buy “cheap and safe” companies. Marty Whitman also writes great shareholder letter. If you missed his latest letter, please read it here.

    Marty Whitman’s Third Avenue Value Fund is now co-managed by himself and Ian Lapey. He bought more Tellabs Inc., reduced Nabors Industries Ltd. during the 3-months ended 07/31/2011, according to the most recent filings. As of 07/31/2011, Third Avenue Value Fund owns 42 stocks with a total value of $4 billion. These are the details of the buys and sells.  


  • Marty Whitman Q3 Shareholder Letter

    Legendary value investor Marty Whitman just released his shareholder letter. Being an expert with debt investing, Mr. Whitman shared his view on the US debt. He finished his letter with these commentaries:

    ________  


  • Marty Whitman's Second Quarter Sells — A Winner (XEC) and a Loser (BFSB)

    Martin Whitman is an influential investor known for his keen insight and in-depth shareholder letters. He is the founder and portfolio manager of the Third Avenue Value Fund (TAVFX) as well as adjunct professor at Yale University. He invests by buying and holding stocks that trade at significant discounts to intrinsic value. Usually, only when a company undergoes a fundamental change in its business or capital structure that significantly alters the security’s inherent value does he sell. Whitman has achieved a 10-year cumulative return of 91.4% compared to the 16.4% return of the S&P 500. In the second quarter of 2011, he sold out of two stocks, Cimarex Energy Co. (XEC) and Brooklyn Federal Bancorp Inc. (BFSB).

    Cimarex Energy Co. (XEC)  


  • Marty Whitman Quarterly Commentary: Investing in the Distressed Credits of Troubled Companies

    There are four specialized areas where a distress investor ought to be reasonably knowledgeable, say knowledgeable enough to be an informed, intelligent client: • Securities Law and Regulation • Financial Accounting • Income Tax Law and Regulation • Bankruptcy Law Distress Investing divides into five separate, but sometimes related, businesses.

    1) Performing loans, where the great weight of probability is that the credit instruments will remain performing loans.  


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