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.
Of his investing philosophy, Rewey wrote in his third-quarter investor letter:
“Investors’ obsessing over near”term reported earnings could lose focus on what drives long”term performance. It is the redeployment of cash flows (both internally and externally generated) that are a larger determinant of long”term investment success. Current cash flows invested poorly aren’t worth very much over time. Thus, while the historical compounding of Book Value is one area we look at when researching potential new investments, our work centers around the ability of a company to continue to compound book value at double digit rates in the future.”
Third Avenue Value Fund’s two third-quarter new buys were: Anixter International Inc. (AXE, Financial) and Cheung Kong Property Holdings Ltd. (HKSE:01113, Financial).
Anixter International Inc. (AXE, Financial)
The fund purchased 441,900 shares of Anixter International, a 1.73% portfolio weight. The stock’s third quarter average price was $63.
Rewey commented at length on establishing the new position in his letter:
“In the quarter, we initiated a new position in Anixter International(NYSE:AXE). We became very interested in the company as its stock price sold off from a peak of $106 in March 2014 to about $65 in July of this year, as investors became concerned about the economy slowing down and the negative effects of the strong U.S. dollar. Anixter is a global distributor and solutions provider for a multitude of cables, electrical wires and electrical and security equipment for offices and industrial plants,” he said. Read the rest of his commentary here.
Anixter International Inc., formerly known as Itel Corp., was incorporated in Delaware in 1967. Anixter International Inc. has a market cap of $1.95 billion; its shares were traded around $59.15 with a P/E ratio of 10.68 and P/S ratio of 0.29. Anixter International Inc. had annual average earnings growth of 7.2% over the past 10 years. GuruFocus rated Anixter International Inc. the business predictability rank of 2-star.
Cheung Kong Property Holdings Ltd. (HKSE:01113, Financial)
The fund purchased 3.99 million shares of Cheung Kong Property Holdings Ltd., a 1.97% portfolio weight. The company’s third quarter share price averaged HK$60.
Cheung Kong Property Holdings Ltd. has a market cap of HK$216.72 billion; its shares were traded around HK$56.70 with a P/S ratio of 7.01. The dividend yield of Cheung Kong Property Holdings Ltd. stocks is 0.62%.
The fund made double digit increases to four stocks: Weyerhaeuser Co. (WY, Financial), Investor AB (OSTO:INVE B), Kingfisher Plc (LSE:KGF, Financial) and Brookdale Senior Living Inc. (BKD, Financial).
Weyerhaeuser Co. (WY, Financial)
The fund increased its Weyerhaeuser position by 24.88% to 3,080,090 shares, or 5.6% of the portfolio. The company’s third quarter share price averaged $30.
Weyerhaeuser Co. was incorporated in the state of Washington in January 1900. Weyerhaeuser Co. has a market cap of $13.96 billion; its shares were traded at around $27.15 with a P/E ratio of 9.42 and P/S ratio of 1.97. The dividend yield of Weyerhaeuser Co. stocks is 4.33%. Weyerhaeuser Co. had annual average earnings growth of 47.2% over the past five years.
Investor AB (OSTO:INVE B)
The fund increased its Investor AB position by 26.4% to 961,970 shares, or 2.2% of the portfolio. The company’s third quarter share price averaged kr316.
Investor AB is a Sweden-based industrial holding company. Investor AB has a market cap of kr216.19 billion; its shares were traded around kr281.80 with a P/E ratio of 4.02 and P/S ratio of 8.48. The dividend yield of Investor AB stocks is 3.19%.
Kingfisher Plc (LSE:KGF, Financial)
The fund increased its position in Kingfisher Plc by 31.4% to 4,823,425 shares, or 1.6% of the portfolio. The company’s third quarter share price averaged £4.
Kingfisher Plc is incorporated on Sept. 16, 1982 in the UK. Kingfisher Plc has a market cap of $7.92 billion; its shares were traded around ÂŁ3.53 with a P/E ratio of 14.19 and P/S ratio of 0.75. The dividend yield of Kingfisher Plc stocks is 2.91%. Kingfisher Plc had annual average earnings growth of 5.0% over the past 10 years.
Brookdale Senior Living Inc. (BKD, Financial)
The fund increased its position in Brookdale Senior Living by 2.3% to 1,159,500 shares, or 2.27% of the portfolio. The company’s third quarter share price averaged $30.
Brookdale Senior Living Inc. was incorporated in Delaware on June 28, 2005. Brookdale Senior Living Inc. has a market cap of $4.51 billion; its shares were traded around $24.42 with a P/S ratio of 0.89. Brookdale Senior Living Inc. had annual average earnings growth of 9.9% over the past 10 years.
See more of Chip Rewey’s stocks in the Third Avenue Value Fund portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here. Get your ticket to the GuruFocus 2016 Value Conference here!
