Martin Whitman

Martin Whitman

Last Update: 06-29-2017
Related: Third Avenue Management

Number of Stocks: 35
Number of New Stocks: 2

Total Value: $1,074 Mil
Q/Q Turnover: 3%

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

Martin Whitman Watch

  • Third Avenue Comments on WesBanco Bank

    WesBanco Bank (NASDAQ:WSBC)


    WesBanco is a mid-sized, community bank with just under $10 billion in assets headquartered in Wheeling, West Virginia. Over the last twenty years, the company made some 25 acquisitions to enter the neighboring states of Ohio and western Pennsylvania. Starting in 2014, the bank hired CEO Todd Clossin, who was the CEO of Midwest and Florida regionsfor Fifth Third Bank, to accelerate the growth. Within a year on board, Clossin made the two largest acquisitions in the company's history: ESB Financial in Pittsburgh in February 2014 (a thrift with $1.9 billion in assets; paid $324MM in cash and stock) and Your Community Bankshares (YCB) in southern Indiana and Kentucky in September 2016 ($1.5 billion in assets; paid $221 MM in cash and stock). These two additions effectively lifted WSBC's asset base by 60%, from $6.0 billion to $9.5 billion today.

      


  • Third Avenue Comments on PDC Energy

    PDC Energy (NASDAQ:PDCE)


    As touched on earlier in the letter, PDCE is a $2.7 billion independent Exploration and Production company. PDCE has core acreage positions in the Delaware Basin, specifically in Reeves County, Texas and in the Wattenberg Field (Niobrara Shale), in Colorado. Both acreage positions contain prolific high-quality oil and gas rich deposits that have allowed PDCE to grow production levels rapidly (44% growth in 2016) at high return levels. As PDCE ramps up its drilling activities in the Permian Basin, PDCE should be able to continue this growth trajectory, targeting a 25%-40% range over the next several years.

      


  • Third Avenue Comments on Haynes International

    Haynes International (NASDAQ:HAYN)


    Haynes International Inc. is a $450 million equity market cap manufacturer of nickel and cobalt high temperature (HTA) and corrosion resistant (CRA) alloys. While we have known Haynesfrom a research perspective for over a decade, we finally got the opportunity to purchase a position in the company in the second quarter, as its shares sold off from over $45 per share in January to our entry point of roughly $35. While the stock price decline provided us an opportunity in line with our patient buying approach, we also feel the investment is quite timely given the expected acceleration of the company's aerospace related sales and a likely strong improvement in free cash flow, as it wraps up a major capital expenditure program to increase production levels nearly 50% at its core Kokomo Indiana mill.

      


  • Third Avenue Comments on Finisar Corp

    Finisar Corporation (NASDAQ:FNSR)


    Finisar is a well-financed provider of optical subsystems and components, which are used in data communications and telecommunications. It was the market share leader in 2016, according to Ovum (market-leading research and consulting firm focused on digital service providers), and has held that honor since 2008. Demand for optical is being driven by additional network bandwidth needs due to increasing data and video traffic. Video downloads and streaming, social networking, on-line gaming, enterprise IP/Internet traffic, cloud computing, and data center virtualization - these are all putting additional demands on the network for increased bandwidth. In response, the telecom industry is ramping up metro (city-level) deployments in North America and Europe; China is increasing itsbuildouts supported by government initiatives to complete broadband coverage in rural and urban areas. On the data communications side, there is an increase in hyperscale data centers (think Amazon Web Services, Microsoft's Azure, Google and the like) and deployments of technology to upgrade existing connections to increase speed and efficiency in the networks.

      


  • Third Avenue Comments on AMN Healthcare Services

    AMN Healthcare Services (NYSE:AMN)


    Founded in 1985 as a travel nursing company, AMN has become a leading healthcare staffing company that offers temporary placement of healthcare professionalsfor hospitals to fulfill various durations ranging from one day to 2 years. Since 2013, the company spent a total of $360MM on several acquisitions to enter the "solutions" business (outsourced recruiting, permanent staffing, managing personnel, and software scheduling for hospitals) to extend its portfolio. In terms of profit drivers, travelling nurses and allied healthcare workers contribute about 55% of pre-overhead EBITDA, while temporary physicians and the new Solutions segments contribute approximately 20% and 26%, respectively.

      


  • Third Avenue Small-Cap Value Fund 2nd Quarter 2017 Shareholder Letter

    In the second quarter, the broader market indices of the Russell 2000 Value, the S&P 500, the Nasdaq composite, etc., all continued to trade at or near all-time highs. While clearly we agree that there are pockets of high expectations in the broader market, The Third Avenue Small Cap Value Fund had an active quarter in new purchases, as our robust,repeatable and definable philosophy and idea origination processes led us to uncover and execute new positions. Given this seeming contradiction of a market reaching new highs and our enthusiasm for several new positions, we thought it would be timely to review our stock idea origination philosophy and process.


    Every Third Avenue idea comes from following our core philosophy as originally articulated by Martin Whitman (Trades, Portfolio), that is the three pillars of: i) Creditworthiness, as defined by a strong balance sheet, ii) the ability to compound book value growth and iii) purchasing at a significant discount to our estimated Net Asset Value.

      


  • Third Avenue Management Comments on Reliance Steel & Aluminum

    New Position: Reliance Steel & Aluminum (NYSE:RS) Founded in the late 1930s, Reliance Steel & Aluminum (Reliance) has grown to become the largest metals service center in North America. Given the name of the company, one could be forgiven for thinking the company produces steel and aluminum. In actuality, as an operator of service centers, Reliance's business is providing essential value-added servicesand distribution for these metals, as well as brass, copper, titanium and other alloys, with more than 100,000 products offered. A few examples of the value-added services Reliance provides are slitting, laser cutting and electropolishing. The company operates a network of more than 300 locations across almost 40 states in the U.S.and a dozen countries.


    Reliance has been on our radar for years during which time we've had the chance to meet with management and tour its operations. After a decline in its stock price this year, we took advantage of the opportunity to initiate an investment with a belief that the company isvery well-positioned to continue its profitable growth, both organically and inorganically. As the domestic and global economy grows over the long term, the need for metal products is ever-increasing, and Reliance has carved out a defendable niche for itself serving this demand. Specifically, Reliance focuses on smaller customers with relatively small orders that need the company's high-quality products quickly (40% of orders are delivered the next day). Taken together, this affords Reliance sticky customer relationships (97% repeat business) with superior margins and pricing, regardless of underlying metal prices. As Reliance's share of its market is still only in the single-digits, the company should continue growing both with the industry and also through ongoing share gains. Reliance has been able to steadily capture market share over its history given the breadth of its productsand services, its buying power and operational efficiency, and the exceptional quality of its products and customer service. Another notable competitive advantage is Reliance's strong balance sheet, with net debt of approximately 30% of capital, 2.2x EBITDA, and strong cash flows for deleveraging. In an industry with a number of poorly capitalized peers, Reliance's financial position has given rise to lasting partnerships with its suppliers and customers and is tied to the quality of its products as it has allowed Reliance the ability tomake industry-leading investments in state-of-the-art equipment.

      


  • Third Avenue Value Fund's 2nd Quarter Portfolio Commentary

    Does Thematic Investing Have A Place In Value Investing?


    Dear Fellow Shareholders:

      


  • Martin Whitman Buys Avnet, Sells CBS, Exits Apache

    Martin Whitman (Trades, Portfolio) is founder and portfolio manager of the Third Avenue Value Fund. During the second quarter the guru traded shares in the following stocks:


    The investor bought 467,694 shares in Avnet Inc. (AVT) with an impact of 1.68% on the portfolio.

      


  • Third Avenue International Value Fund 1st Quarter Letter

    Matthew Fine, CFA I Lead Portfolio Manager


    Dear Fellow Shareholders:

      


  • Third Avenue Continues to Buy Amgen, 8 Others

    Third Avenue Management (Trades, Portfolio) was founded by legendary value investor Martin Whitman (Trades, Portfolio). It manages mutual funds, separate accounts and hedge funds. In both fourth-quarter 2016 and first-quarter 2017 the guru bought shares in the following stocks:


    Carrizo Oil & Gas Inc. (CRZO)

      


  • A Review of 'Invest Like a Guru'

    The first stock I ever bought was in the eighth grade during a stock market competition. My current affairs teacher – a certain Mr. Brown – wanted to demonstrate the markets were nothing more than a vast national casino. Perusing the newspaper stock prices (how quaint!), I made up my mind to buy Gensco. I had absolutely no idea what Gensco was, what it sold or whether it even made money. The really attractive fact was the shares were trading at 23 cents per share. Just think how many of these so-called shares I could buy! Mr. Brown was wrong that day. I did not see the markets as a nefarious casino, but rather a candy shop where the only thing that matters is how many pieces can you buy with the money you have.


    Oh, how I could have used Charlie Tian’s book, “Invest Like a Guru,” along with his website, GuruFocus.com! Many investors – much like my eighth grade self – fail to create and follow a structured and tested methodology in stock investing. Usually driven by whims and emotions, investors rarely think of investing as owning a piece of a business. Rather, they see investments as dots and numbers as a backdrop to human megaphones like Jim Cramer.

      


  • Toyota Industries Leads in High-Tech Automotive and Forklifts

    Toyota Industries Corp. (TYIDF) is the original Toyota Motor Corp. (NYSE:TM). The company excels in automotive parts and forklifts. It also holds billions of dollars in Toyota stock and several other Japanese companies. The stock is a major holding of the Third Avenue Value Fund.


    The stock trades at 5,790 yen ($50.69), there are 325.84 million shares outstanding and the market cap is 1.89 trillion yen ($16.5 billion). It takes 114 yen to buy one dollar. Earnings per share are 401.92 yen and the price-earnings ratio is 14.4. The dividend is 125 yen and the dividend yield is 2.16%.

      


  • Martin Whitman Sells Comerica, Buys Amgen

    Martin Whitman (Trades, Portfolio) is founder and portfolio manager of the Third Avenue Value Fund. During the first quarter the guru traded shares in the following stocks:


    The investor reduced his holding in Comerica Inc. (CMA) by 32.65% with an impact of -2.1% on the portfolio.

      


  • Third Avenue Management 1st Quarter Shareholder Letter

    Dear Fellow Shareholders:


    It has been an eventful quarter and we thought we would begin our discussion of the Fund's performance and activities by answering the question we were most frequently asked this quarter.

      


  • Third Avenue Management Comments on Lennar

    We initiated Lennar (NYSE:LEN) in October, and thus wrote up our comments in our prior shareholder letter, but due to the shift in our letter cadence, we are republishing our thoughts from our initial purchase.


    Marty Whitman said in October 1996: "Given Third Avenue's investment criteria, it is more accurate to view the situation as the industry selecting the Fund, rather than Third Avenue choosing the industries in which to invest' We think this quote superbly describes the opportunity the Value Fund saw in establishing a position in Lennar Corporation common in the quarter, as the shares sold off somewhat inexplicably from nearly $50 per share at their recent peak and allowed us to establish a position at just over $41.

      


  • Third Avenue Management Comments on Cerner

    Cerner (NASDAQ:CERN) is a leading health care information technology company. We have long admired Cerner as it is a well-financed compounder, having compounded book value at an average rate of 16% over the past 10 years. Delays in customer adoption of healthcare Information Technology (IT) systems as regulatory mandates have lengthened, exacerbated by concerns about potential changes to the ACA and the impact on healthcare IT spend, have negatively pressured Cerner's common stock price down from over $67 to our initial purchase cost of approximately $48, giving us an opportunity to acquire shares of Cerner common stock at an attractive valuation.


    Healthcare IT has been in the sweet spot of spending for hospitals as regulatory reform and increasingly complex regulatory requirements have driven a greater need for IT solutions. The ACA and Health Information Technology Economic and Clinical Health Act (HITECH) were established to transition the U.S. healthcare system from fee-for-service towards value-based outcomes, i.e., incentivizing hospitals and providers for increasing quality of care and patient outcomes rather than the volume of procedures performed. As part of this initiative, electronic health records systems were required and analytics and data collection to monitor outcomes is increasing. Cerner is one of the market leaders in these systems. Similar to other IT companies, services and software for the installed base of systems generates high-margin recurring revenue. Further, many legacy systems are in need of upgrades to enable them to meet the new regulatory requirements. Given its market leading position, Cerner has been gaining share and is well-positioned to continue to take share. In addition, there has been consolidation within the industry, including some vendors discontinuing products.

      


  • Calendar 4th Quarter Shareholder Letter From Marty Whitman's Third Avenue Value Fund

    Dear Fellow Shareholders:


      



  • Third Avenue Management Comments on Petroleum Geo-Services

    Petroleum Geo-Services ("PGS") (OSL:PGS) Throughout December and early January, PGS completed its refinancing activities as described in our previous letter. PGS conducted an equity raise primarily for the purpose of refinancing its 2018 bonds. The Fund was a holder of both PGS equity and its 2018 bonds. We were pleased to participate in improving PGS’ capital structure via the equity offering, which precipitated a meaningful price appreciation of both our equity and credit positions. PGS tendered for our 2018 bonds PGS on terms favorable to bondholders, and meanwhile the company’s equity responded very favorably to the improvement in the company’s capital structure and the elimination of its nearest debt maturity. Our investments in PGS securities have been important contributors to performance of late.

      


  • Third Avenue Management Comments on Lundin Mining

    Lundin Mining (“Lundin”) (TSX:LUN) In mid-November, Lundin announced that it had entered into an agreement to sell its holding in an entity called TF Holdings Ltd. TF is the entity through which Lundin and Freeport-McMoRan have for many years controlled a Central African copper mine called Tenke Fungurume. The Lundin transaction essentially is the sale of a 24% economic interest in the mine for the agreed price of CAD 1.14 billion. This transaction is expected to close during the first half of 2017 and would add considerable cash to what is already one of the mining industry’s best balance sheets. While Tenke Fungurume is an unusually high quality mine, its jurisdiction can at times be an unusually challenging place to do business. We view the transaction price as reasonable and look positively upon the prospective reduction of political risk embedded within Lundin. With the transaction proceeds Lundin would also bolster its position as one of the very few companies in a position to acquire mining assets at one of the rare times when some very decent assets may be available for sale.

      


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