The widely followed Third Avenue Value Fund (Trades, Portfolio) on Thursday announced its stock buys for the fourth quarter, revealing that the managers invested in three foreign-based companies out of their four new positions.
The fund was managed since its inception in 1990 by the legendary Martin Whitman, who passed leadership to others in 2012. Present-day portfolio managers Matthew Fine and Michael Fineman assumed responsibility on Sept. 19, 2017, with the goal to “revitalize the deep value philosophy” that defined Whitman’s approach. They encapsulated the elements of his style into four pillars:
“First, the issuers of securities we purchase must have an especially strong financial position. Second, stock prices must be available for purchase at a discount to readily ascertainable net asset value. Third, there must be comprehensive financial disclosures and adequate investor protections. Fourth, the probability that the company may compound underlying net asset value by double-digit rates over the next three to five years appears high,” they wrote in a third-quarter 2017 letter.
A year later, in their third-quarter 2018 letter, Fine and Fineman reiterated their commitment to employing the principles of the fund's early and most successful days.
“The highly distilled version of what that style means to us is a focuson deploying the Fund’s assets into long-term investment opportunities with distressed prices but without distressed financial positions. It also means placing a considerable emphasis on businesses with tangible assets with readily estimable values, specifically those which are not at risk of obsolescence,” they wrote.
In the fourth quarter, the portfolio managers started positions in: Daimler AG (XTER:DAI, Financial), Antofagasta PLC (LSE:ANTO, Financial), Subsea 7 SA (OSL:SUBC, Financial) and DowDuPont Inc. (DWDP, Financial).
Daimler AG (XTER:DAI, Financial)
Third Avenue purchased 281,200 shares of Daimler AG, giving it 1.89% portfolio weight. The stock’s fourth-quarter share price averaged 55 euros.
Daimler AG has a market cap of $48.41 billion; its shares were traded around $45.25 with a price-earnings ratio of 5.34 and price-sales ratio of 0.29. The trailing 12-month dividend yield of Daimler AG stocks is 8.07%. The forward dividend yield of Daimler AG stocks is 8.07%. Daimler AG had an annual average earnings growth of 10% over the past 10 years.
Antofagasta PLC (LSE:ANTO, Financial)
Third Avenue purchased 954,716 shares of Antofagasta PLC, giving it 1.08% portfolio weight. The stock’s fourth-quarter share price averaged 8 euros.
Antofagasta Plc has a market cap of $7.6 billion; its shares were traded around $7.70 with a price-earnings ratio of 15.40 and price-sales ratio of 2.14. The trailing 12-month dividend yield of Antofagasta Plc stocks is 0.68%. The forward dividend yield of Antofagasta Plc stocks is 1.69%.
Subsea 7 SA (OSL:SUBC, Financial)
Third Avenue purchased 752,303 shares of Subsea 7 SA, giving it 1.07% portfolio weight. The stock’s fourth-quarter share price averaged 113 kroner.
Subsea 7 SA has a market cap of 26.8 billion kroner; its shares were traded around 83.98 kroner Thursday with a price-earnings ratio of 16.73 and price-sales ratio of 0.84. Subsea 7 SA had an annual average earnings growth of 2.90% over the past 10 years.
DowDuPont Inc. (DWDP, Financial)
Third Avenue purchased 162,090 shares of DowDuPont, giving it 0.99% portfolio weight. The stock’s fourth-quarter share price averaged $65.
DowDuPont Inc. has a market cap of $120.47 billion; its shares were traded around $52.51 with a price-earnings ratio of 164.11 and price-sales ratio of 1.43. The trailing 12-month dividend yield of DowDuPont Inc. stocks is 2.89%. The forward dividend yield of DowDuPont Inc. stocks is 2.79%. DowDuPont Inc. had an annual average earnings growth of 1.8% over the past 10 years.
See Third Avenue Value Fund (Trades, Portfolio)’s portfolio here.
