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James Li
James Li
Articles (1392)  | Author's Website |

Third Avenue Value Fund's Top 4 Trades of the 3rd Quarter

Fund of the late Marty Whitman releases quarterly portfolio

The Third Avenue Value Fund (Trades, Portfolio), which was launched in 1990 under the late Marty Whitman, disclosed this week that its top four trades for the third quarter included a position boost in Comerica Inc. (NYSE:CMA) and sells in three companies: Lennar Corp. (NYSE:LEN.B), Interfor Corp. (TSX:IFP) and Warrior Met Coal Inc. (NYSE:HCC).

The fund seeks long-term capital appreciation through a global, all-cap approach that emphasizes a company's financial strength and the ability to compound value. Fund manager Matthew Fine said in his June-quarter letter that management analyzes businesses as if the fund intends to own the entire business for the long term. For the three-month period, Third Avenue Value returned 25.3%, outperforming the MSCI World Index benchmark return of 19.57%.

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As of the quarter-end, the fund's $360 million equity portfolio contains 29 stocks, with three new positions and a turnover ratio of 12%. The top three sectors in terms of weight are in basic materials, financial services and industrials, representing 33.61%, 16.85% and 16.52% of the equity portfolio.

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Comerica

The fund added 109,211 shares of Comerica, increasing the position 59.91% and its equity portfolio 1.08%. Shares averaged $36.58 during the third quarter.

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According to GuruFocus, the Dallas-based bank's cash-to-debt ratio of 1.83 outperforms 57.37% of global banks despite equity-to-asset and debt-to-equity ratios underperforming over 53% of global competitors.

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Other gurus with holdings in Comerica include Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

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Lennar

The fund sold 146,536 Class B shares of Lennar, trimming the position 43.41% and its equity portfolio 1.55%. Shares averaged $46.16 during the third quarter.

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GuruFocus ranks the Miami-based homebuilder's profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 9 and an operating margin that is outperforming over 94.26% of global competitors despite declining approximately 2.7% per year on average over the past five years.

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Mario Gabelli (Trades, Portfolio)'s GAMCO Investors Inc. (NYSE:GBL) also has a holding in Lennar.

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Interfor

The fund sold 891,531 shares of Interfor, trimming the position 25.35% and its equity portfolio 1.46%. Shares averaged 11.24 Canadian dollars ($8.44) during the third quarter.

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The Vancouver-based company produces and sells lumber, timber and other wood products. GuruFocus ranks the company's financial strength 6 out of 10: Even though debt ratios are underperforming more than half of global competitors, Interfor's equity-to-asset ratio of 0.57 outperforms 63.76% of global forest product companies.

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Warrior Met Coal

The fund sold 187,260 shares of Warrior Met Coal, trimming the position 12.48% and its equity portfolio 0.65%. Shares averaged $15.03 during the third quarter.

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The Brookwood, Alabama-based company produces met coal at several underground mines in the state. GuruFocus ranks the company's financial strength 6 out of 10 on the heels of equity-to-asset and debt-to-Ebitda ratios outperforming over 66% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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