The firm founded by legendary investor Martin Whitman (Trades, Portfolio), Third Avenue Management (Trades, Portfolio), selected eight new stocks and its flagship value fund beat the market in the fourth quarter.
The Third Avenue Value Fund returned 4.72% in the fourth quarter, outperforming the 3.83% rise in the S&P 500 index. For the year, it returned 13.39%, also surpassing the 11.96% rise in the index. Leading its gains was the advance of its parcel of banks that it has accumulated over the past several years. As managers who focus on buying stocks low and holding for the long term, almost all of the financials they picked have risen substantially in price, and they see more appreciation to come.
In combination with their patient approach, the managers of the value fund prioritize a strong balance sheet and the ability of a business to compound over time when researching stocks. When the prices of businesses meeting their criteria fall, they purchase rather than avoid them. The stocks they chose in the fourth quarter can therefore be said to likely fit that mold as well.
Third Avenue also oversees small cap value, real estate and international value funds. Here are the largest purchased by all of the funds of Third Avenue Management (Trades, Portfolio): Parkway Inc. (PKY, Financial), Cerner Corp. (CERN, Financial), Korn/Ferry International (KFY, Financial), Trinet Group Inc. (TNET, Financial) and BMC Stock Holdings Inc. (BMC, Financial).
Third Avenue purchased 1,044,662 shares of Parkway Inc., taking 1.05% of the portfolio. The company’s fourth-quarter stock price averaged $19 per share.
Parkway is a real estate investment trust based in Houston, Texas. Parkway has a market cap of $1.1 billion; its shares were traded around $22.38.
Cerner Corp. (CERN, Financial)
Third Avenue purchased 408,707 shares of Cerner Corp., taking 0.88% of the portfolio. The company’s stock price averaged $53 per share.
Cerner is a health care IT company. Cerner has a market cap of $18.23 billion; its shares were traded around $55.29 with a P/E ratio of 30.07 and P/S ratio of 3.96. Cerner had an annual average earnings growth of 15.5% over the past 10 years. GuruFocus rated Cerner the business predictability rank of 4.5-star.
Korn/Ferry International (KFY, Financial)
Third Avenue purchased 125,500 shares of Korn/Ferry International, taking 0.17% of the portfolio. The company’s stock price averaged $24 per share.
Korn/Ferry International is a talent management company. Korn/Ferry International has a market cap of $1.75 billion; its shares were traded around $30.53 with a P/E ratio of 82.52 and P/S ratio of 1.05. The trailing 12-month dividend yield of Korn/Ferry International stocks is 1.32%. The forward dividend yield of Korn/Ferry International stocks is 1.31%. Korn/Ferry International had an annual average earnings growth of 4.6% over the past 10 years.
Trinet Group Inc. (TNET, Financial)
Third Avenue purchased 128,600 shares of Trinet Group, taking 0.15% of the portfolio. The company’s stock price averaged $23 per share.
Trinet is a human resources company. Trinet Group has a market cap of $2.28 billion; its shares were traded around $26.37 with a P/E ratio of 36.12 and P/S ratio of 0.64.
BMC Stock Holdings Inc. (BMCH)
Third Avenue purchased 141,000 shares of BMC Stock Holdings, taking 0.12% of the portfolio. The company’s stock price averaged $18 per share.
BMC Stock Holdings is a lumber and building materials distributor. BMC Stock Holdings has a market cap of $1.35 billion; its shares were traded around $20.30 with a P/E ratio of 169.17 and P/S ratio of 0.42.
See Third Avenue Management (Trades, Portfolio)'s portfolio here.
