As stated in the most recent Third Avenue Value Fund letter, Mr. Whitman states:
I feel very good about the Fund's investments in Wheelock Common, Cheung Kong Common, Henderson Land Common…
…These are the types of investments where TAVF (Third Avenue Value Fund), as a passive, non-control investor is able to obtain meaningful interests in well-financed companies at prices that represent material discounts from readily ascertainable net asset values. The same opportunities are just not available to control investors. This was brought home to me in a conversation with one of the world's most important, and successful, real estate investors. The gentleman was relating to me how attractive he thought Hong Kong real estate is but he cannot invest there because there is no control; and the best assets are already controlled by Wheelock, Cheung Kong and Henderson Land.
To gain a perspective on the attractiveness of real estate in Hong Kong, go back to the October 31, 2005 shareholder letter of the Third Avenue Real Estate Value Fund:
Fund management's real estate team recently returned from a one-week due diligence trip to Hong Kong that included meetings with senior consultants, analysts and brokers, as well as property tours. In general, we were very impressed with the quality of management teams, their understanding of their respective markets, their conservative, long term investment focus and non-promotional demeanor. We were also very impressed with the high quality of the properties, the favorable market dynamics and high barriers of entry in the Hong Kong market.
Before getting too carried away with Hong Kong real estate, Mr. Whitman states:
We would much prefer to invest in the United States rather than in Hong Kong, or anyplace else, assuming that other things are close to equal. But they are not. Probably the best way to characterize our large presence in Hong Kong is to call it "less safe, more cheap."
The Hong Kong real estate holdings of the Third Avenue Funds include:
Henderson Land (HLDVF.PK), Cheung Kong Holdings (CHEUY.PK), Wheelock & Company (WHLKF.PK), Wharf Holdings, Hong Kong Land, Hang Lung (HLPPY.PK), and Tai Chung Holdings.
Also check out:
- Martin Whitman Undervalued Stocks
- Martin Whitman Top Growth Companies
- Martin Whitman High Yield stocks, and
- Stocks that Martin Whitman keeps buying
About the author:
Bryan Kelleher is A Certified Public Accountant with a passionate interest in locating superior investments. You may contact him at email@example.com.