Martin Whitman is Founder and Portfolio Manager of the Third Avenue Value Fund (TAVFX).
Whitman turns to buy and hold. He generally focuses on companies with strong finances that are very well run but also have cheap stock, that is to say, that trade below intrinsic value. He sometimes decides to sell too. This usually happens when he notices a fundamental change in the business or in the capital structure of the company that adversely affect value. He may also sell when the market value is above average price.
At an interview for SmartMoney, he said: “In the final analysis, value investing means being price conscious rather than outlook conscious. You buy what is cheap and safe. Most everybody else is outlook conscious, or price unconscious. But growth investing is a misnomer. When people talk about growth investing, they mean generally recognized growth. We do real growth investing in value, but we don't pay for it. You can't do generally recognized growth without paying for it. Growth investing entails a willingness to pay up front. If you concentrate on growth investing, you concentrate on the outlook, rather than the price. Most people want to buy a stock that will go up; they don't care if it's cheap or not.”
I created a short list of the stocks that TAVFX is selling:
Brookfield Asset Management (BAM, Financial): Whitman sold at an average price of $28
BAM owns and manages commercial property, power and infrastructure assets. Its assets are concentrated in the United States, Canada, Brazil, and Australia but it also operates around the globe.
The firm currently faces refinancing risks. It carries almost $33 billion in debt, which is mainly made up of commercial mortgage and subsidiary debt.
The firm’s forward P/E is 18.73. BAM’s financial leverage is 5.47 and the dividend yield is 1.84%.
Nabors (NBR, Financial): Whitman sold at an average price of $26
NBR is one of the world's largest land rig drilling contractors. 75% of its revenue is represented by North America. In addition, Nabors provides well servicing, engineering, transportation, and other services for oil and gas producers.
Lately, Nabors has retired nearly 150 land rigs in the United States. This is a signal that the industry's shift toward premium shale-ready rigs is unlikely to abate anytime soon.
Nabors has a market cap of $5,4B and a P/E ratio of 12.9.
Brooklyn Federal Bancorp (BFSB, Financial): Whitman sold at an average price of $0,7
BFSB is the holding company for Brooklyn Federal Savings Bank. This company offers traditional savings and loan services to businesses and individuals. It also offers additional services like business checking, online banking, home mortgage loans, and other personal loans. The company operates through branches located in Brooklyn and Long Island, NY.
Now, the company is trying to close a merger with and into Investors Bancorp, Inc. It has the support of ISS and Glass Lewis. Management states that the merger will be beneficial for shareholders and expects to close the deal in 2012.
Cimarex Energy (XEC, Financial): Whitman sold at an average price of $87
XEC is an independent exploration and production company with operations throughout the Southern and Central U.S. The firm was created in 2002 as a result of a spin off from Helmerich & Payne and subsequent merger with Key Production.
Unfortunately, some of the company´s properties, particularly those of the Gulf Coast saw a deep decline in production volumes: almost 51%. Furthermore, the company has been severely affected by inflation. Fortunately, the service cost inflation is starting to slow down.
The firm’s operating margin is 56.48%. XEC’s low debt/equity ratio is 0.12 and the firm’s dividend yield is 0.55%. XEC has a market cap of $5,558M and a Beta ratio of 1.64.
MDC Holdings (MDC, Financial): Whitman sold a an average price of $29
MDC is the holding company for Richmond American Homes, HomeAmerican Mortgage, American Home Insurance, and American Home Title and Escrow. Richmond American Homes, in charge of selling single-family homes in Colorado, Arizona, California, among other regions accounts for 97% of the company´s sales.
The market capitalization is of $864.98Million and EBITDA amounts to $-53.42 million.
The P/E ratio is not calculable; Price/Sales ratio is 0.89 and Price/Book ratio 0.86. Dividend yields at 5.57 percent and the beta ratio is 1.06.
Whitman turns to buy and hold. He generally focuses on companies with strong finances that are very well run but also have cheap stock, that is to say, that trade below intrinsic value. He sometimes decides to sell too. This usually happens when he notices a fundamental change in the business or in the capital structure of the company that adversely affect value. He may also sell when the market value is above average price.
At an interview for SmartMoney, he said: “In the final analysis, value investing means being price conscious rather than outlook conscious. You buy what is cheap and safe. Most everybody else is outlook conscious, or price unconscious. But growth investing is a misnomer. When people talk about growth investing, they mean generally recognized growth. We do real growth investing in value, but we don't pay for it. You can't do generally recognized growth without paying for it. Growth investing entails a willingness to pay up front. If you concentrate on growth investing, you concentrate on the outlook, rather than the price. Most people want to buy a stock that will go up; they don't care if it's cheap or not.”
I created a short list of the stocks that TAVFX is selling:
Brookfield Asset Management (BAM, Financial): Whitman sold at an average price of $28
BAM owns and manages commercial property, power and infrastructure assets. Its assets are concentrated in the United States, Canada, Brazil, and Australia but it also operates around the globe.
The firm currently faces refinancing risks. It carries almost $33 billion in debt, which is mainly made up of commercial mortgage and subsidiary debt.
The firm’s forward P/E is 18.73. BAM’s financial leverage is 5.47 and the dividend yield is 1.84%.
Nabors (NBR, Financial): Whitman sold at an average price of $26
NBR is one of the world's largest land rig drilling contractors. 75% of its revenue is represented by North America. In addition, Nabors provides well servicing, engineering, transportation, and other services for oil and gas producers.
Lately, Nabors has retired nearly 150 land rigs in the United States. This is a signal that the industry's shift toward premium shale-ready rigs is unlikely to abate anytime soon.
Nabors has a market cap of $5,4B and a P/E ratio of 12.9.
Brooklyn Federal Bancorp (BFSB, Financial): Whitman sold at an average price of $0,7
BFSB is the holding company for Brooklyn Federal Savings Bank. This company offers traditional savings and loan services to businesses and individuals. It also offers additional services like business checking, online banking, home mortgage loans, and other personal loans. The company operates through branches located in Brooklyn and Long Island, NY.
Now, the company is trying to close a merger with and into Investors Bancorp, Inc. It has the support of ISS and Glass Lewis. Management states that the merger will be beneficial for shareholders and expects to close the deal in 2012.
Cimarex Energy (XEC, Financial): Whitman sold at an average price of $87
XEC is an independent exploration and production company with operations throughout the Southern and Central U.S. The firm was created in 2002 as a result of a spin off from Helmerich & Payne and subsequent merger with Key Production.
Unfortunately, some of the company´s properties, particularly those of the Gulf Coast saw a deep decline in production volumes: almost 51%. Furthermore, the company has been severely affected by inflation. Fortunately, the service cost inflation is starting to slow down.
The firm’s operating margin is 56.48%. XEC’s low debt/equity ratio is 0.12 and the firm’s dividend yield is 0.55%. XEC has a market cap of $5,558M and a Beta ratio of 1.64.
MDC Holdings (MDC, Financial): Whitman sold a an average price of $29
MDC is the holding company for Richmond American Homes, HomeAmerican Mortgage, American Home Insurance, and American Home Title and Escrow. Richmond American Homes, in charge of selling single-family homes in Colorado, Arizona, California, among other regions accounts for 97% of the company´s sales.
The market capitalization is of $864.98Million and EBITDA amounts to $-53.42 million.
The P/E ratio is not calculable; Price/Sales ratio is 0.89 and Price/Book ratio 0.86. Dividend yields at 5.57 percent and the beta ratio is 1.06.
