The Fund's "Safe and Cheap" approach to common stock investment encompasses consideration of four factors: super strong financial positions; reasonable managements; understandable businesses; and a price that represents a meaningful discount from our estimate of what the security would be worth were the business a private company, or a take-over candidate. Very frequently, and probably most of the time, the near-term earnings outlook for the common stocks Third Avenue is acquiring is anywhere from clouded to very poor...
Thus far, over the fifteen plus years of life of TAVF, ignoring market risks altogether has not been a major problem. while market risk has been a factor for individual securities held by the Fund, it has not been important for the TAVF portfolio as a whole, even though the Third Avenue portfolios seems to be far more concentrated than are the portfolios of other mutual funds of comparable size.
In recent years, i.e., post the bubble which burst in 2000, TAVF has restricted its investments in the common stocks of high-tech companies to issuers which are large, well-established companies; where cash holdings alone are well in excess of total book liabilities; and where the price to earnings ratio at the time of purchase was not much more than 10 times the peak earnings of past years. Intel Common met these criteria. The near-term operating outlook for Intel seems poor; the long-term outlook seems fairly favorable. At the end of the quarter, high-tech, Intel-like common stock holdings accounted for about 4% of Fund's net assets.
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Thus far, over the fifteen plus years of life of TAVF, ignoring market risks altogether has not been a major problem. while market risk has been a factor for individual securities held by the Fund, it has not been important for the TAVF portfolio as a whole, even though the Third Avenue portfolios seems to be far more concentrated than are the portfolios of other mutual funds of comparable size.
In recent years, i.e., post the bubble which burst in 2000, TAVF has restricted its investments in the common stocks of high-tech companies to issuers which are large, well-established companies; where cash holdings alone are well in excess of total book liabilities; and where the price to earnings ratio at the time of purchase was not much more than 10 times the peak earnings of past years. Intel Common met these criteria. The near-term operating outlook for Intel seems poor; the long-term outlook seems fairly favorable. At the end of the quarter, high-tech, Intel-like common stock holdings accounted for about 4% of Fund's net assets.
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