Chip Rewey, portfolio manager for Third Avenue Value Fund, reduced the fund's stake in Masco Corp. (MAS, Financial) by selling 467,200 shares of the company during the third quarter. The reduction had a -1.19% impact on Third Avenue Value Fund’s portfolio. It now owns 710,930 shares of the company.
Masco has a market cap of $11.3 billion, a P/E ratio of 26.13, an enterprise value of $13.53 billion, a current ratio of 1.87 and a quick ratio of 1.40.
Masco is one of the world’s largest manufacturers of brand name products for the home improvement and new home construction markets. The company’s history dates back to 1929, when Alex Manoogian, the company’s founder, organized Masco Screw Products Company in Detroit, Michigan. In 1936, Masco became a public company and was listed on the Detroit Stock Exchange. By 1942, the company was generating a significant amount of revenue from World War II, and it was generating annual sales in excess of $1 million. Since the end of World War II, Masco has become a conglomerate of more than 20 companies, with nearly 60 facilities in the United States. The company is currently ranked 345th on the Fortune 500 list of companies. It currently has 25,000 employees.
According to GuruFocus, Masco has a 5 of 10 financial strength rating with a cash to debt ratio of 0.32 and an interest coverage ratio of 4.14. Its Piotroski F-Score of 6 indicates a typical financial situation for a stable company. The company also has a 5 of 10 profitability and growth rating with an operating margin of 14.28%, a net-margin of 6.12%, an ROA of 7.63% and an ROC (Joel Greenblatt (Trades, Portfolio)) of 68.95%.
Since the second quarter of 2015, the Third Avenue Value Fund has made an estimated 40% with its investment in Masco. It is likely that Rewey decided to reduce Third Avenue Value Fund’s stake in Masco because the company was trading close to its 10-year high in price during the third quarter and wanted to cash in on some of the profits.
Below is a Peter Lynch chart that shows Masco is trading above its intrinsic value.
The Third Avenue Value Fund was originally founded in 1990 by Martin Whitman (Trades, Portfolio), which he ran for 22 years before handing off his duties to Rewey. Rewey had the privilege of learning from Whitman, and he attributes his investment style to the knowledge and wisdom he gained from Whitman. The fund's investment philosophy is to maintain a concentrated portfolio and they focus on a company's financial strength to ensure the company can weather the storm in times of adversity.
Disclosure:Â Â Author does not own any shares of any stocks mentioned in this article.
Start a free 7-day trial of Premium Membership to GuruFocus.
Also check out:
