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Martin Whitman Buys Covanta Holding Corp., Keycorp, Cenovus Energy Inc, Bank Of NY Mellon, Sells Ambac Financial Group Inc.

April 08, 2010 | About:

Third Avenue Value Fund was founded by legendary value investor Martin Whitman. The fund invests heavily in Asia. Mr. Whitman writes great shareholder letters quarterly, where value follow can learn his insight.

In the 3 months ended Jan. 31, 2010, the fund buys Covanta Holding Corp., Keycorp, Cenovus Energy Inc, Cit Group Inc., sells Ambac Financial Group Inc. during the 3-months ended 01/31/2010, according to the most recent filings of his investment company, Third Avenue Value Fund. Martin Whitman owns 52 stocks with a total value of $4.8 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

This is the sector weightings of his portfolio:


These are the top 5 holdings of Martin Whitman

  1. HENDERSON LAND DEV (HLDVF.PK) - 114,391,738 shares, 15.09% of the total portfolio. Shares reduced -4.35%
  2. CHEUNG KONG HOLDINGS (CHEUY.PK) - 53,819,000 shares, 13.3% of the total portfolio.
  3. TOYOTA INDUSTRIES CP (TYIDF.PK) - 18,576,400 shares, 11.42% of the total portfolio.
  4. POSCO (PKX) - 3,500,000 shares, 8.24% of the total portfolio.
  5. Nabors Industries Ltd. (NBR) - 11,090,000 shares, 5.15% of the total portfolio.


Added: Bank Of NY Mellon (BK)

Martin Whitman added to his holdings in Bank Of Ny Mellon Cp by 9.09%. His purchase prices were between $25.84 and $30.96, with an estimated average price of $27.72. The impact to his portfolio due to this purchase was 0.3%. His holdings were 6,000,000 shares as of 01/31/2010.

This is the commentary of the fund managers on BK:

Fund Management purchased an additional 500,000 shares of Bank of New York Mellon Common at approximately $27 per share during the quarter. The Fund’s original investment was in Mellon Financial Corporation common stock in 2006. Under the leadership of new CEO, Robert Kelly, Mellon merged with the Bank of New York in 2007. Although the merger created the largest global custodian ($22.3 trillion under custody as of December 31, 2009) and one of the largest asset management firms ($1.1 trillion under management as of December 31, 2009), it has been somewhat disappointing to date for shareholders. Despite healthy results in its cash generative core asset management and asset servicing businesses, the financial results of the combined company have been negatively impacted by numerous write-downs to its securities portfolio, particularly relating to Alt-A mortgage backed securities.

Nevertheless, the Bank of New York Mellon has fared better than most financial companies over the last couple of years as it has emerged from the global credit crunch and bear market with a strong financial position (12% Tier-1 Capital ratio even after repaying TARP) and only minimal shareholder dilution. Furthermore, the company’s recent fourth quarter results were healthy, as assets under management and custody increased 20% and 10%, respectively, compared to a year ago. The company also reported much improved results for both its securities and loan portfolios. The recently announced $2.3 billion acquisition of
PNC’s asset servicing business appears to be an attractive strategic fit. Overall, the company now appears to be well positioned to generate the attractive net asset value growth that Fund Management envisioned when the Bank of New York merger was announced.

Bank of New York is a bank holding company and one of the world's larger financial institutions. Bank Of Ny Mellon Cp has a market cap of $38.02 billion; its shares were traded at around $31.46 with a P/E ratio of 14.5 and P/S ratio of 2.8. The dividend yield of Bank Of Ny Mellon Cp stocks is 1.1%. Bank Of Ny Mellon Cp had an annual average earning growth of 2.7% over the past 10 years.

New Purchase: Covanta Holding Corp. (CVA)

Martin Whitman initiated holdings in Covanta Holding Corp.. His purchase prices were between $16.78 and $19.54, with an estimated average price of $17.87. The impact to his portfolio due to this purchase was 3.22%. His holdings were 8,816,889 shares as of 01/31/2010.

Covanta Holding Corporation is an internationally recognized owner and operator of large-scale Energy-from-Waste and renewable energy projects and a recipient of the Energy Innovator Award from the U. Covanta Holding Corp. has a market cap of $2.64 billion; its shares were traded at around $17.04 with a P/E ratio of 25.9 and P/S ratio of 1.7.

New Purchase: Keycorp (KEY)

Martin Whitman initiated holdings in Keycorp. His purchase prices were between $5.32 and $7.34, with an estimated average price of $6.07. The impact to his portfolio due to this purchase was 1.5%. His holdings were 10,000,000 shares as of 01/31/2010.

This is the commentary of Third Avenue Value Fund on Keycorp:

Shares were purchased at less than $6 per share, representing a significant discount to both tangible book value of approximately $8 per share and our estimated net asset value after adjusting for expected future loan losses and the offbalance sheet value of its healthy asset management business. Although the near-term earnings outlook is weak, future net asset value growth should be driven by an expanding net interest margin, reduced loan loss provisions and a return to a more normal level of demand for loans. The primary risk to the investment appears to be further deterioration in its commercial real estate loan portfolio and a dilutive equity raise to repay TARP and/or retain strong capital ratios. Fund Management would probably try to avoid dilution by participating in such an equity offering, particularly if it is at a discount.



KeyCorp is an integrated multi-line financial services company. Keycorp has a market cap of $7.53 billion; its shares were traded at around $8.52 with and P/S ratio of 1.2. The dividend yield of Keycorp stocks is 0.5%.

New Purchase: Cenovus Energy Inc (CVE)

Martin Whitman initiated holdings in Cenovus Energy Inc. His purchase prices were between $23.15 and $26.6, with an estimated average price of $24.75. The impact to his portfolio due to this purchase was 0.37%. His holdings were 776,800 shares as of 01/31/2010.

Cenovus Energy is an integrated oil company headquartered in Calgary, Alberta. Cenovus Energy Inc has a market cap of $20.71 billion; its shares were traded at around $27.57 with and P/S ratio of 2. The dividend yield of Cenovus Energy Inc stocks is 2.8%.

New Purchase: Cit Group Inc. (CIT)

Martin Whitman initiated holdings in Cit Group Inc.. His purchase prices were between $26.04 and $33.79, with an estimated average price of $30.25. The impact to his portfolio due to this purchase was 0.16%. His holdings were 234,609 shares as of 01/31/2010.

CIT Group Inc. is a bank holding company that provides financing and leasing capital for commercial companies throughout the world. Cit Group Inc. has a market cap of $15.75 billion; its shares were traded at around $38.92 with and P/S ratio of 3.9.

Reduced: Ambac Financial Group Inc. (ABK)

Martin Whitman reduced to his holdings in Ambac Financial Group Inc. by 65.16%. His sale prices were between $0.69 and $1.5, with an estimated average price of $0.84. The impact to his portfolio due to this sale was -0.08%. Martin Whitman still held 8,955,191 shares as of 01/31/2010.

Ambac Financial Group, Inc. is a holding company whose subsidiaries provide financial guarantee products and other financial services to clients in both the public and private sectors around the world. Ambac Financial Group Inc. has a market cap of $175.2 million; its shares were traded at around $0.6091.


Rating: 1.9/5 (9 votes)

Comments

superguru
Superguru - 4 years ago
Wow, almost 17 gurus bough CIT last quarter. How did I miss it?

I am not using my gurufocus membership properly.
sarpotd
Sarpotd - 4 years ago


Whitman championed many of the worst hit financial comapnies as they were falling down (MBI, ABK, RDN, MGIC). I remember dstinctly that he was adamant that MBI would make money even if it went into receivership. He had an ongoing tussle with Bill Ackman at the time, with both taking opposite sides of the debate.

Whitman quietly sold away all his financial positions just before they started their climb up. I have to wonder what was his logic behind buying them and then selling them. In the latest quarterly report he insists that MBI stock is worthless and the bonds have value instead.

I am not sure I understand his rationale. and I am somewhat disappointed that he hasnt explained why his views have changed on these companies over the years. His actions dont create a lot of confidence.

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