Martin Whitman

Martin Whitman

Last Update: 2014-06-23
Related: Third Avenue Management

Number of Stocks: 38
Number of New Stocks: 1

Total Value: $2,092 Mil
Q/Q Turnover: 3%

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

Martin Whitman' s Profile & Performance

Profile

Martin Whitman is Founder and Portfolio Manager of the Third Avenue Value Fund (TAVFX). Whitman is a 1949 graduate of Syracuse University, which recently renamed its School of Management after Whitman, after a large gift from him in June 2003. He is an adjunct faculty member at Yale School of Management.

Web Page:http://www.thirdavenuefunds.com/

Investing Philosophy

Whitman is a "buy and hold" value investor. He buys stock in companies when he thinks that the company has strong finances, competent management, and the business is understandable. Also the company's stock must be cheap, meaning it trades at a significant discount to intrinsic value. The market price must lie substantially below a conservative valuation of the business as a private entity, or as a takeover candidate. He generally sells an investment only when there has been a fundamental change in the business or capital structure of the company that significantly affects the investment's inherent value, or when he believes that the market value of an investment is overpriced relative to its intrinsic value

Historical Allocation of Stock, Bonds, Cash

Total Holding History

Performance of Third Avenue Value Fund

YearReturn (%)S&P500 (%)Excess Gain (%)
201318.8431.55-12.7
201227.4815.412.1
2011-20.682.08-22.8
3-Year Cumulative20.2 (6.3%/year)55 (15.7%/year)-34.8 (-9.4%/year)
201013.8715.06-1.2
200944.5126.4618.0
5-Year Cumulative97.7 (14.6%/year)125.5 (17.7%/year)-27.8 (-3.1%/year)
2008-45.61-37-8.6
20075.765.610.2
200614.6915.79-1.1
200516.494.9111.6
200426.621214.6
10-Year Cumulative92.4 (6.8%/year)104.1 (7.4%/year)-11.7 (-0.6%/year)
200310.4628.7-18.2
20027.13-22.129.2
200110.82-11.922.7
20000.91-9.110.0
199910.0621-10.9
15-Year Cumulative180.3 (7.1%/year)98.3 (4.7%/year)82 (2.4%/year)
199816.7228.6-11.9
1997-5.0333.4-38.4
199611.0223-12.0
19952.3637.6-35.2
1994-3.221.3-4.5
20-Year Cumulative241.7 (6.3%/year)483.2 (9.2%/year)-241.5 (-2.9%/year)
19931.3610.1-8.7
199210.887.63.3
1991-0.2630.5-30.8

Top Ranked Articles

Marty Whitman’s Conviction in Ambac is Working out; Still waiting for MBIA and Radian Group?
Legendary investor Marty Whitman’s purchases of bond and mortgage insurers Radian (RDN), Ambac (ABK) and MBIA (MBI) have been very controversial, and widely discussed. Watching an investment plunging 95% and continuing to buy more, what kind of conviction does that need? Read more...
Clash of the Titans: Martin Whitman Versus Bruce Greenwald
Marty Whitman is truly a living legend in the world of value investing. It is always a pleasure to read and find great investing insights from his letters. Here in this letter from the year 2001 he reflects on "net nets" and investing practiced in the real world, as opposed to what is taught in the business schools. The concept of Net-Nets was invented by Graham and Dodd and is very rarely found in the present markets, however Marty Whitman refined this definition to the next level. He explains that for a retailer it's inventory which is considered to be a current asset, is in fact a fixed asset of the worst type and it cannot stay in the business without maintaining a certain level of inventory. However, for a company which owns some real estate and has triple A tenants with long term leases in class A office buildings it can sell the properties or refinance them. It may be called a fixed asset, but it is much more current asset than a retailer's inventory. Using this definition one can find companies trading below their net current assets. Read more...
Stock Market Valuation June 2, 2011
I find the current valuations astonishing. No I am not refering to linkedin or Groupon or the high fliers. The overall market is so overvalued considering the macro picture. I am not a macro investor, but Wall Street is. It makes no sense for the Shiller PE to be at 23 (an earnings yield of 4.3%), when the deficit is out of control, there is inflation accross the board except Real estate (the one asset class QE2 was really supposed to help!), housing is in a double dip, unemployment cannot come down for years unless there is job growth of 500k a month (close to impossible). Additionally, the Euro zone is experiencing a big crisis, Japan suffered a catastrohpic humanitarian and economic disaster, and countries like China are starting to get nervous about over heating in their economies. Read more...
Stock Market Valuation: April 3, 2011
The current level of the S&P500 is 1,332, and the Dow is at 12,377--nearly unchanged from last month. As evidenced below, market valuations did not change much over the last month. Read more...
Stock Market Valuation May 2, 2011
The current level of the S&P500 is 1,364, and the Dow is at 12,811–higher than last month, but valuations remained overall the same. As evidenced below, market valuations did not change much over the last month. I update market valuations on a monthly basis. The point of this article is to measure the stock market based on seven different metrics. This article does not look at the macro picture and try to predict where the economy is headed. It only uses these several metrics which have been very good past indicators of whether the market is fairly valued. Read more...
» More Martin Whitman Articles

Commentaries and Stories

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Why Gurus Are Buying AGCO?
Martin Whitman of Third Avenue Value Fund added 253,642 shares of AGCO Corp (AGCO) at an average price of $53.6. More...

LONG, FARM & CONSTRUCTION MACHINERY


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Third Avenue Management Comments on Toyota
Perhaps because it has "Toyota" (TM) in its name or perhaps because it spun out Toyota Motor years ago, many people view Toyota industries as largely an automotive parts type company. it is, but also derives around 50% of operating income from its material handling equipment business, where it is the global market share leader. The company also has a logistics segment and a textiles machinery business. The company is profitable and growing and, furthermore, has an attractive investment securities portfolio, the value of which exceeds Toyota industries' current market value. The businesses are separable but not likely saleable (perhaps if it were not a Japanese company). Changes in corporate governance are afoot in Japan. The government is working on new corporate governance rules requiring independent directors, or in the absence of that, an explanation of deviations. Further, Japan is working on a Stewardship Code to encourage institutional investors to disclose their proxy votes and engage in dialogue with companies on issues that could impact long-term share value. a new stock index, the JPX- Nikkei 400, highlights this new focus. More...

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Third Avenue Management Comments on Symantec
Symantec (SYMC) operates in security software and IT storage management businesses with its well-known brands, such as Norton. Recently, it has experienced management turnover, with its second CEO terminated by the Board in as many years. The surprise announcement was due to what appears to be slower than expected execution of a previously announced new strategy. The company had already started to embark on its new strategy to improve growth capabilities, including restructuring the sales force and eliminating duplicative organizational and operating structures. While not central to our original investment thesis, we have long thought that the company's businesses seem separable and saleable. Strategic firms could be potentially interested in its various businesses, though it could also be interesting to private equity firms given the strong cash flow characteristics of the business. More...

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Third Avenue Management Comments on Bank of New York Mellon
BNY Mellon (BK) ("BK") participates in two businesses –asset management and investment servicing. The company had $1.6 trillion in assets under management and $27.9 trillion of asset under custody and/or administration, as of March 31, 2014. The businesses seem separable and more valuable on a sum-of-the-parts basis. The asset management business with its iconic Dreyfus Funds and stable of boutique managers could certainly be a stand- alone entity or would seem to attract interest from strategic or financial buyers. BK has been in the news recently given more shareholder scrutiny of its operating efficiency. Recently, there have been news reports that BK could be looking to sell its Corporate Trust unit, which has been a detractor due to the run-off of high-margin securitizations. More...

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Third Avenue Management Comments on Cavco Industries
The Fund's largest position is the common stock of Cavco industries inc. (CVCO), which represented 5.6% of the Fund's net assets as of quarter end. Since Cavco is not a household name, we thought it would be helpful to discuss the history of the investment and why we are so excited about its future. The Cavco investment originated during the 2008 financial crisis. Fleetwood Enterprises, a leading producer of manufactured homes and recreational vehicles ("RVs") had filed for bankruptcy, and its announcement of the sale of its RV business in a bankruptcy auction indicated that the manufactured housing business could be available on similar terms. Fund Management had long followed the manufactured housing industry and knew that Fleetwood had a strong brand name and reputation as a quality manufacturer. Fund Management contacted Joe Stegmayer, the Chairman and CEO of Cavco, to discuss the situation and learned that Cavco was also interested in the Fleetwood manufactured housing business. Fund Management had known Joe Stegmayer for many years, dating back to when he was president of industry leader Clayton Homes, and had tremendous respect More...

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Third Avenue Management Comments on Chong Hing Bank Ltd
The majority, 77%, of the Fund’s Chong Hing (HKSE:01111) Common position was accepted for tender by Yuexiu Financial Holdings, part of the Yue Xiu Group, a Chinese company. As discussed in the 2013 year end letter, Fund Management was very pleased with the price of this transaction (2.4 times book value, including a special dividend), particularly considering that the shares had been purchased below book value. More...

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Third Avenue Management Comments on Vodafone
Additional shares of Vodafone (VOD) Common were purchased following the completion of the company's sale of its 45% stake in Verizon Wireless to Verizon. This transaction resulted in a significant distribution to shareholders consisting mostly of Verizon common stock and also of cash. Fund Management elected to sell the Verizon shares owing to concerns about slowing growth and increasing completion in the US along with the company's leveraged balance sheet. Vodafone has a very strong financial position and is well positioned to benefit from consolidation in the European telecommunication market and growth in emerging markets. Vodafone Common accounted for 2.5% of the Fund's net assets at quarter end. More...

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Third Avenue Management Comments on White Mountains
Property and casualty insurance companies (Alleghany Common and White Mountains (WTM) Common). Both companies have generated solid (high single digit) annual book value growth since the Fund invested in 2012 despite a challenging environment characterized by low interest rates and competitive underwriting. Shares of both companies, which account for 3.1% of the Fund’s assets in total, were purchased at modest discounts to book value. More...

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Third Avenue Management Comments on Alleghany
Property and casualty insurance companies (Alleghany (Y) Common and White Mountains Common). Both companies have generated solid (high single digit) annual book value growth since the Fund invested in 2012 despite a challenging environment characterized by low interest rates and competitive underwriting. Shares of both companies, which account for 3.1% of the Fund’s assets in total, were purchased at modest discounts to book value. More...

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Third Avenue Management Comments on Posco
The position in Posco (PKX) common was increased slightly at about a 50% discount to book value. Despite excess capacity and pricing pressure in the global steel industry, particularly in China, Posco's steel business continues to perform relatively well as evidenced by its 7% operating margin in both 2013 and the first quarter of 2014. The company continues to have a strong financial position, and its recent investments in non-steel businesses should start to contribute more meaningfully over the next couple of years, particularly in energy (more on this later in this letter). Posco common accounted for 5.4% of the Fund's net assets at quarter end. More...

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Third Avenue Management Comments on Apache
Oil and gas exploration and production (“E&p”) companies (Encana Common and Apache Common (APA)). Shares of both companies were purchased below our estimates of net asset value, despite generally improving business fundamentals, particularly for natural gas. More...

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Third Avenue Management Comments on Encana
Oil and gas exploration and production (“E&p”) companies (Encana Common (ECA) and apache Common). Shares of both companies were purchased below our estimates of net asset value, despite generally improving business fundamentals, particularly for natural gas. More...

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Third Avenue Management Comments on AGCO Corp
Fund Management initiated a position in the common stock of AGCO Corp. (AGCO) ("AGCO") during the quarter. AGCO is a pure-play agricultural company dedicated to farm machinery, grain storage solutions and protein production equipment. It is a global company with sales generated across the following geographies: 23% U.S., 53% Europe, 23% Latin America and 1% Asia pacific. It maintains an investment grade balance sheet, is highly cash generative, and has been consistently profitable. Despite these appealing characteristics, the current valuation is depressed due to short-term concerns. More...

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Martin Whitman's Third Avenue Funds 2Q 2014 Shareholder Letters
Dear Fellow Shareholders: More...

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Third Avenue Management Comments on Prosperity Bancshares
The addition of Prosperity Common expanded the Fund’s bank basket to six holdings. Houston-based Prosperity Bancshares (PB) is a bank holding company operating with a traditional community banking mindset, a far cry from the behemoth money center banks that have been exposed as too big to manage, too big to regulate and just plain too conflicted. it appears that management runs a tight ship: the company has been profitable every year since its formation, even during the massive economic downturn in Texas in the late 1980’s and during the 2008/2009 financial crisis. Historically the company has grown by making opportunistic acquisitions of banks and branches around Texas. During 2008, for example, the bank acquired $3.6 billion of deposits and certain assets of Franklin Bank from the Federal Deposit insurance Corporation, as receiver. Management’s wellmanaged, bolt-on acquisition strategy along with superb efficiency and conservative underwriting have produced an enviable track record, with adjusted book value1 compounding at mid-teens rates over the past five, ten and fifteen years. Our analysis suggests that management has an ample runway to continue doing more of the same. More...

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Third Avenue Management Comments on Actuant
We view Wisconsin-based Actuant (ATU) as an industrial “miniconglomerate” distinguished by its operational strength, broadly respected brands and deep distributor relationships. Historically acquisitive, the company manufactures highly specialized industrial products, everything from hydraulic tools for the construction, rail and power generation industries, to pipeline connectors and concrete tensioners for the oil and gas industry, to smaller motion control systems used by truck, auto andWe view Wisconsin-based actuant as an industrial “miniconglomerate” distinguished by its operational strength, broadly respected brands and deep distributor relationships. Historically acquisitive, the company manufactures highly specialized industrial products, everything from hydraulic tools for the construction, rail and power generation industries, to pipeline connectors and concrete tensioners for the oil and gas industry, to smaller motion control systems used by truck, auto and agricultural vehicle Original Equipment Manufacturers (“OEMs”). Management’s efforts to diversify the business have expanded the company’s presence into 30 countries, dampened the cyclicality of many More...

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Marty Whitman's Q2 2014 Third Avenue Letter - High Frequency Trading
Dear Fellow Shareholders: High Frequency Trading ("HFT") has been on the front pages of the financial press ever since the publication earlier this year of Michael lewis' book, Flash Boys. The book demonstrates once again how difficult it is to prosper as an investor in markets where longer-term fundamental analysis of companies and securities are ignored. The ways most market participants who lack specific knowledge about individual companies and the securities they issue can prosper seems to encompass at least one of the three factors: More...

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Third Avenue Management - The Tapering Rate of Interest in Tapering
Overview More...

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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. More...

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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 More...

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