Martin Whitman

Martin Whitman

Last Update: 06-29-2015
Related: Third Avenue Management

Number of Stocks: 38
Number of New Stocks: 3

Total Value: $1,844 Mil
Q/Q Turnover: 7%

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

Martin Whitman Watch

  • Third Avenue Management Comments on Nintendo

    During the quarter, we trimmed several positions that had appreciated, particularly in financial services, and eliminated the Fund's position in Nintendo Common (OSE:7974). During the year and a half in which we owned nintendo Common, the business performance was poor while the stock performance was strong. Therefore, we elected to sell and lock-in our 30% return, rather than wait for a turnaround which, while possible, will be challenging.

    From Third Avenue Management (Trades, Portfolio)'s first quarter 2014 letter.  

  • Third Avenue Management Comments on Kurita Water Industries Ltd.

    We also initiated a position in the common stock of Kurita Water Industries Ltd. ("Kurita") (TSE:6370), a Japan-based provider of water treatment chemicals, facilities and maintenance. Kurita's business is currently depressed, as many of its Japanese electronics customers have been struggling and the company has experienced cost over-runs as part of its recent international expansion efforts. nevertheless, Kurita has remained profitable and generated positive free cash flow despite the challenging industry environment. The company is well positioned, with a debt free and cash rich balance sheet. This financial flexibility will allow for the continued international expansion efforts. The management team has a good long-term track record, having operated the business profitably in each of the last ten years. Additionally management is much more shareholder friendly than most Japanese companies, as evidenced by a history of share repurchases (7% of the outstanding shares since 2011) and a dividend increase in each of the last ten years. Kurita common was purchased at a slight premium to book value and about a 7.5% free cash flow yield. Cash and marketable short-term investments account for about one third of the company's market cap.

    From Third Avenue Management (Trades, Portfolio)'s first quarter 2014 letter.  

  • Third Avenue Management Comments on Michelin

    We initiated a position in the common stock of Compagnie Generale des Etablissements Michelin SCA ("Michelin") (XPAR:ML) during the quarter. This purchase added to the Fund's growing exposure to European Blue Chip common stocks, which we discussed in last quarter's letter. Other recently initiated European Blue Chip common stock positions include Total, Pargesa and Vodafone. Each of these companies has a very strong financial position, capable management team, healthy growth prospects and a common stock selling at a meaningful discount to our estimate of net asset value with a mid-single digit dividend yield.

    Michelin is a leading producer of tires for cars, trucks, motorcycles, aircraft, subway trains and mining equipment. The company has a very strong market position, with nearly 15% of the global tire market, trailing only Bridgestone. The company's auto tire business is heavily weighted towards the premium and replacement tire markets, which have attractive growth prospects. Michelin has an extremely strong financial position with net debt to capital and net debt to Earnings Before Interest, Taxes Depreciation and Amortization ("EBITDA") of only 12% and 0.3 times. Management has an impressive long-term track record, as evidenced by profitability in each of the last ten years and an improvement in operating margins over that period to 11.5% from 5%. return on capital has increased to 13% from 5% over this period, and management is targeting as 15% return on capital by 2020. The stock was purchased at about 11 times earnings with attractive free cash flow and dividend yields of 9% and 3%, respectively.


  • Martin Whitman’s Third Avenue Management First Quarter Stock Buys

    Martin Whitman (Trades, Portfolio)’s Third Avenue Management (Trades, Portfolio) team mostly seeks companies trading at discounts to their net asset values (NAV) between 25% and 75%, which are well financed and have excellent growth records. Companies of the Dow Jones Industrial Average (DJIA), Whitman notes in his first quarter 2014 letter released today, cost $2.76 for each $1.00 of corporate net assets. His funds’ portfolio companies, by contrast, cost $0.25 to $0.75 for each $1.00 of corporate assets. “This discrepancy makes no economic sense except that the discounts have always existed for the securities named at the start of this paragraph and no catalysts such as changes in control or going private, appear to exist for those companies,” he says.

    In addition: “The quality of net assets of the TAM portfolio companies appears to be significantly better than the quality of the net assets of the DJIA portfolio companies. Also NAV, or book values, seem to be significantly more important in analyzing the TAM portfolio companies and their securities than is the case for the DJIA portfolio companies.”  

  • Marty Whitman's Third Avenue Management First Quarter 2014 Letter

    Dear Fellow Shareholders: Much emphasis is placed on general "debt levels" in the belief that the amounts borrowed by u.S. Federal, State and Local governments are excessive. Indeed, 74% of recent poll 1 respondents stated that a high priority ought to be given to debt reduction by governments.

    It is obvious that this almost universal emphasis on general debt levels is misplaced. rather the emphasis should be on the credit-worthiness of borrowers, specifically what are the borrower's abilities to access capital markets, if needed.


  • Martin Whitman’s Third Avenue Value Fund’s Top Five Year-End Stocks

    Martin Whitman, the chairman of the board at Third Avenue Asset Management, made a relatively early release of his fund’s third quarter portfolio this week. While Whitman no longer manages the funds at Third Avenue, he continues to write the shareholder letter each quarter. Third Avenue focuses on valuing its stocks from the bottom up, focusing on the “creditworthiness,” the ability for the “issuer to grow net asset value (NAV)” and the stock’s price in relation to its NAV.

    Over the duration of the fourth quarter the portfolio managers at Third Avenue bought two new stocks bringing the fund’s total to 37 stocks valued at $2.3 billion.


  • Martin Whitman's Third Avenue Management - New Buys and Adds

    In his annual letter to shareholders, Martin Whitman of Third Avenue Funds railed against Modern Capital Theory (efficient market theory), arguing instead that it is possible to outperform markets by bottom-up analysis of businesses and the securities they issue. He also listed four characteristics that define a Third Avenue Funds portfolio holding:

    1. The companies enjoy super strong financial positions.


  • Martin Whitman Comments on Twitter

    Twitter (NYSE:TWTR) went public November 7, 2013 at $26 per share. On the first day of trading, Twitter Common closed at $45.90.There are obvious benefits to being an early IPO investor, assuming you can get a position size large enough to make a difference to a portfolio's over all return. Even these investors, however, achieved returns orders of magnitude lower than those obtained by Twitter's early investors and its most senior employees. The prospectus discloses, inter alia that 42,708,824 options on common shares, exercisable at an average price of $1.84 per share, were outstanding on June 30, 2013. On occasion, Third Avenue's funds can attempt to recreate this type of scenario by participating in a capital raise or refinancing (see the Third Avenue Real Estate Fund's investment in Trinity Place Holdings, discussed in that team's fourth quarter 2013 letter) but mostly we seek to create the possibility of achieving outsized returns by purchasing undervalued securities in the open market.

    From Martin Whitman's Third Avenue Management fourth quarter 2013 investor letter.   

  • How Do Good and Financially Sound Companies Become Cheap - Amit Wadhwaney of Third Avenue

  • Give the Gift of Value - Holiday Gift Ideas for the Should-Be Investor

    We are now in the heart of the holiday gift-buying season and finding that perfect gift for the investors on your list can be daunting.

    Looking through the business and finance section of a bookstore like Barnes & Noble or browsing the section on Amazon can be bewildering at times. The current best-seller list of investing books includes books about candlesticks, gold, trading strategies, forex, trend trading, options and futures.  

  • Marty Whitman's Third Avenue Fourth Quarter Portfolio Manager Commentary

    Dear Fellow Shareholders: Academics involved with finance restrict their studies to analyzing markets and securities prices. As far as they are concerned, the study of companies and the securities they issue are someone else's business. I am disappointed that a Nobel Prize was awarded to Eugene Fama, who studies only markets and prices; and whom, I daresay, does not focus on Form 10-Ks or the footnotes to a corporation's audited financial statements. In fact there is no way of determining whether any market is efficient or not in measuring underlying values unless the analyst understands, and analyzes, the specific securities that are the components of that specific market.

    Market participants make two types of decisions—market decisions and investment decisions. Market decisions involve predicting security prices and are, virtually, always very short-run oriented. Investment decisions involve, inter alia, determining underlying value, resource conversion probabilities; terms of securities; credit analysis, and probable access to capital markets particularly for providing bailouts to public markets at high prices (versus cost) for promoters, insiders and private investors.  

  • HAR, AMAT, KEY, FCE.A - Third Avenue Management Sells in Review

    The updated portfolio of Third Avenue Management, founded by value investor and Guru Martin Whitman, includes 163 stocks, 24 of them new, a total value at $5.17 billion, and a quarter-over-quarter turnover of 9%. The portfolio is currently weighted with top three sectors: financial services at 18.1%, basic materials at 16.1% and real estate at 15.1%. The stocks bought by Third Avenue Management in the past 12 months have an average return of 11.65%.

    Here are the firm’s third quarter high-impact decreases, starting with the sell out of more than 8.8 million shares of Applied Materials Inc. (AMAT). The company reported financial results for its fourth fiscal quarter, ending Oct. 27, 2013, with orders of $2.09 billion, up 5% sequentially, and silicon systems orders up 16%. AMAT’s net income was $183 million for the reporting quarter, up from a loss of $(515) million in the same fiscal quarter of the prior year. The quarter’s earnings of $0.15 per share (GAAP) were also up from $(0.42) per share in the prior year. Net sales for the quarter were up 1% sequentially, at $1.99 billion, compared to 1.65 billion in the same fiscal quarter of the prior year. Operating income was $211 million for the quarter, up from a loss of $(499) million in the fourth quarter of fiscal year 2012.  

  • Gurus Hold Lows - Manufacturing Suffers Shutdown Backlash

    Although it’s still difficult to gauge the aftershock, American factories are already feeling the backlash of the U.S. government shutdown, and the country’s manufacturing output has dropped for the first time in four years, according to Reuters. GuruFocus research shows that billionaires are avoiding most of the current lows of the manufacturing world. But here’s a look at three companies in the U.S. manufacturing sector, as revealed by the GuruFocus 52-week low screener, showing companies hitting new lows and are still held or recently sold by top investors and insiders.

    Industry Sector: Manufacturing – Furniture and Apparel  

  • Martin Whitman Sells and Reductions in US, Tokyo and Hong Kong Markets

    Guru Martin Whitman’s Third Avenue Value Fund portfolio update lists 37 stocks, three of them new, and a total value of $2.29 billion. The fund’s quarter-over-quarter turnover is 8%. The portfolio is currently weighted by sector with financial services at 26.3%, real estate at 26.3% and technology at 12.4%. Guru Whitman has averaged a return of 5.15% over 12 months, and Third Avenue Management has averaged a return of 7.97% over 12 months.

    Here are the US companies Guru Martin Whitman reduced or sold in the third quarter of 2013:   

  • Third Avenue's Third Quarter Top Stocks

    Martin Whitman, the chairman of the board at Third Avenue Asset Management, made a relatively early release of his fund’s third quarter portfolio this week. While Whitman no longer manages the funds at Third Avenue, he continues to write the shareholder letter each quarter. Third Avenue focuses on valuing its stocks from the bottom up, focusing on the “creditworthiness,” the ability for the “issuer to grow net asset value (NAV)” and the stock’s price in relation to its NAV.

    Over the duration of the third quarter the portfolio managers at Third Avenue bought three new stocks bringing the fund’s total to 37 stocks valued at $2.3 billion.  

  • Martin Whitman Buys 3 New Stocks, 20% Stake in Home Manufacturer

    Martin Whitman is the chairman of the board of Third Avenue Assets Management, a firm with a keen focus on valuing stocks from the bottom up rather than the vicissitudes of the market. In his third quarter letter to his investors, he reveals three vital factors in the Third Avenue stock analysis process:

    “… First the creditworthiness of the company issuing the equity; second, the ability of the issuer to grow net asset value ("NAV") (or its surrogate book value) over the intermediate to longer term; and, three, the price of the common stock relative to NAV.  

  • Third Avenue Management Comments on Taylor Wimpey

    Our current investment in Taylor Wimpey (LSE:TW), the U.K. homebuilder, illustrates several additional ways that accounting figures can be misleading. We first bought shares of Taylor Wimpey in April 2011, in the midst of a severe U.K. housing depression. The company had been producing enormous accounting losses, as its land holdings were being written down to values reflective of the economic depression in which the auditors were assessing the values. Meanwhile, the company also found itself selling houses at depressed prices built on land that had been purchased in years prior at much higher costs. On the face of it, the accounting statements were ugly. While Taylor Wimpey was forced to make downward accounting adjustments to its asset base, it owned the same amount of property within its land bank both before and after the write downs.The accounting losses at that time did not, in our minds, reflect the long-term economic reality of the business. As we look at Taylor Wimpey's financial statements today, the stock having nearly tripled from our cost, the company is producing record profit margins.The large profit margins are, in part,enabled by current high house prices in the U.K., but additionally by the fact the Taylor Wimpey's costs are artificially reduced by virtue of its land having been written down during the real estate depression. In our minds, neither during the industry depression nor in recent record-breaking quarters have the company's financial statements been an accurate representation of reality. In both cases, material analytical adjustments are required to reconcile the financial statements to the real world and the truth is probably somewhere between the two extremes.

    From Third Avenue Management’s third quarter 2013 letter to shareholders.  

  • Third Avenue Management Comments on CST Brands

    Fund Management added a second, related holding in CST Common (NYSE:CST). With nearly two thousand locations throughout the U.S. and Canada (operating primarily under the Corner Store ® banner), CST Brands is the second-largest independent retailer of motor fuels and convenience merchandise in all of North America. CST came onto our radar coincident with its recent spin-off (May 1, 2013) from Valero Energy Corporation, one of the world's largest refining companies. As a result of only recently becoming an independent entity, the company's shares appeared to be temporarily "orphaned," with little sell-side sponsorship, for example, and no readily accessible financial data. CST enjoys a steady, cash-generative business in part because of its relatively broad geographic exposure, with operations spread across nine states in the U.S. (predominantly in the Southwest) and Canada (predominantly Quebec and Ontario). Encouragingly, CST's single largest geographic exposure is the state of Texas (at about a third of CST's store base), giving CST the most exposure to the state's fast-growing economy (based on store count) of all independent convenience store operators. New incentives for management and an ability to allocate capital accordingly will likely help to accelerate corporate growth since former parent Valero appeared to view CST as simply an outlet for motor fuel distribution rather than supporting the potential within its store base.

    In addition to growth in the store base,CST also appears particularly well-positioned to improve its margins over the coming years. We see margin improvement coming from multiple sources, including 1) new larger-format stores that are more profitable than legacy stores, 2) increased focus on food merchandise sales which are much more profitable than fuel and cigarette sales and 3) improved technology systems to better manage inventory and costs (currently upgrading its SAP system). In addition to these initiatives, we expect CST management to make acquisitions in an industry that remains fragmented and characterized by smaller, less efficient operators. The Fund's current cost basis equates to an undemanding (in our view) eight percent free cash flow yield.  

  • Third Avenue Management Comments on Susser Holdings

    Susser Holdings ("Susser") (NYSE:SUSS) traces its roots back to 1938 when Sam and Minna Susser opened two service stations in Corpus Christi, Texas. Seventy five years later, the company is the second-largest non-refining convenience store operator and motor fuel distributer in the state of Texas and one of the largest company-operated convenience store chains in the U.S. (operating under the Stripes® banner) with operations in Oklahoma, New Mexico and Louisiana as well. We view Susser as a compelling long-term investment opportunity for a host of reasons:

    • Growth: Susser has a strong track record of growing organically and via acquisitions under the leadership of CEO Sam L. Susser (grandson of Susser's founder).  

  • Third Avenue Management Comments on Axiall

    The largest single allocation of capital during the quarter was made to Axiall Common (NYSE:AXLL). Axiall is a company formed in January of this year with the closing of a merger between publicly-listed Georgia Gulf, a PVC resin and building products company, and the commodity chemical business of PPG Industries, primarily chlor-alkali (chlorine and caustic). PVC resin and PVC building products are economically sensitive and closely linked to construction; however the past few years have seen a partial de-coupling as a surfeit of domestically produced natural gas and derivatives have lowered energy and raw material costs, thus advantaging U.S. chlor-alkali and PVC resin production relative to most global capacity and promoting exports.

    Georgia Gulf, Axiall's predecessor, is a company we first investigated in 2007.It was a peer of Westlake Chemical, a portfolio holding that we exited earlier this year as the valuation exceeded our estimates of intrinsic value. From our standpoint, Georgia Gulf was poorly capitalized. Our sister fund, Third Avenue Focused Credit Fund would go on to make a successful investment in Georgia Gulf's distressed debt in late 2009, following the ejection of prior management and a capital restructuring. Were-sharpened our pencils in January of 2012 when Westlake made an equity investment and a hostile bid for the company – the former proving successful while the latter not – but ultimately lacked comfort in an improved, but still unsuitable, balance sheet per our standards for an equity investment.  

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