1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Sydnee Gatewood
Sydnee Gatewood
Articles (581) 

Third Avenue Management Picks Up 6 Stocks in 2nd Quarter

Firm’s largest new position is in Hawaiian airline

Investment firm Third Avenue Management (Trades, Portfolio) released its second-quarter portfolio this week, listing six new positions.

According to its website, the New York-based firm, which was founded by the late Martin Whitman (Trades, Portfolio), looks for value among companies that are well financed, have solid fundamentals and are trading at a significant discount to intrinsic value.

During the quarter, Third Avenue established positions in Hawaiian Holdings Inc. (NASDAQ:HA), ATN International Inc. (NASDAQ:ATNI), Sanderson Farms Inc. (NASDAQ:SAFM), Front Yard Residential Corp. (NYSE:RESI), Green Brick Partners Inc. (NASDAQ:GRBK) and Jernigan Capital Inc. (NYSE:JCAP).

Hawaiian Holdings

The firm invested in 398,880 shares of Hawaiian Holdings for an average price of $38.57 per share, allocating 0.71% of the equity portfolio to the position.

The Hawaiian airline has a market cap of $2.06 billion; its shares were trading around $40.63 on Thursday with a price-earnings ratio of 6.01, a price-book ratio of 2.46 and a price-sales ratio of 0.78.

The Peter Lynch chart below shows the stock is trading lower than its earnings line, suggesting it is undervalued.

1709623741.png

GuruFocus rated Hawaiian Holdings’ financial strength 6 out of 10. While the company has a comfortable level of interest coverage, its Altman Z-Score of 2.22 indicates it is under some financial pressure. The airline’s profitability and growth was rated 8 out of 10, supported by an expanding operating margin, a moderate Piotroski F-Score of 5, which means operations are stable, and a business predictability ranking of three out of five stars. According to GuruFocus, companies with this rank usually see an average gain of 8.2% per year and have consistent earnings and revenue growth.

Of the gurus invested in Hawaiian Holdings, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position with 1.68% of outstanding shares. Other guru shareholders include PRIMECAP Management (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Hotchkis & Wiley, Paul Tudor Jones (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and David Dreman (Trades, Portfolio).

ATN International

Third Avenue picked up 115,053 shares of ATN International for an average price of $56.21 per share, expanding the equity portfolio 0.3%.

The Massachusetts-based telecom services company has a market cap of $954.72 million; its shares were trading around $60.66 on Thursday with a price-earnings ratio of 51.70, a price-book ratio of 1.38 and a price-sales ratio of 2.15.

According to the Peter Lynch chart below, the stock is overpriced since it is trading higher than its earnings line.

1830616413.png

ATN’s financial strength was rated 6 out of 10 by GuruFocus. While the company’s interest coverage meets Benjamin Graham’s threshold of 5, the Altman Z-Score of 2.65 indicates it is under minor financial stress. The company’s profitability and growth scored an 8 out of 10 rating. Although the operating margin is in decline, it still outperforms nearly 60% of industry peers. In addition, the telecom company has a strong Piotroski F-Score of 7, implying stable operations, and a 2.5-star business predictability ranking, which is on watch. GuruFocus says companies with this rank typically see an average gain of 7.3% per year. Due to headwinds in its industry or business, however, its fundamentals may soon change.

With 3.46% of outstanding shares, Renaissance Technologies is the company’s largest guru shareholder. Royce and Hotchkis & Wiley also own the stock.

Sanderson Farms

The firm established a 15,407-share holding in Sanderson Farms for an average price of $108.72 per share, dedicating 0.08% of the equity portfolio to the position.

Headquartered in Laurel, Mississippi, the consumer packaged goods company, which produces poultry products, has a market cap of $2.25 billion; its shares were trading around $98.33 on Thursday with a price-earnings ratio of 7.96, a price-book ratio of 1.47 and a price-sales ratio of 0.65.

Based on the Peter Lynch chart below, the stock appears to be undervalued since it is trading below the earnings line.

1618001533.png

Bolstered by no debt and a strong Altman Z-Score, GuruFocus rated Sanderson Farms’ financial strength 9 out of 10. The company’s profitability and growth was rated 8 out of 10 as it has an expanding operating margin, a moderate Piotroski F-Score of 6 and a one-star business predictability ranking. According to GuruFocus, companies with this rank see, on average, a 1.1% gain per year.

Simons’ firm is the company’s largest shareholder among the gurus with 7.87% of outstanding shares. Royce, Steven Cohen (Trades, Portfolio), John Hussman (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Dreman also hold the stock.

Front Yard Residential

Whitman’s firm purchased 65,000 shares of Front Yard for an average price of $10.38 per share. The trade had an impact of 0.03% on the equity portfolio.

The real estate investment trust, which is based in the U.S. Virgin Islands, has a market cap of $548.84 million; its shares were trading around $10.26 on Thursday with a price-book ratio of 0.93 and a price-sales ratio of 5.23.

The median price-sales chart below shows the stock is trading slightly above its historical average.

264352951.png

Front Yard’s financial strength was rated 4 out of 10 by GuruFocus as its low Altman Z-Score of -0.2 indicates it is at risk of going bankrupt. The REIT’s profitability and growth did not fare much better with a 5 out of 10 rating. While the Piotroski F-Score of 6 suggests business conditions are stable, the operating margin is in decline and underperforms 98% of competitors. GuruFocus also warns investors that the company’s revenue per share is in decline and its Sloan ratio indicates poor earnings quality.

With 0.3% of outstanding shares, Hotchkis & Wiley is the company’s largest guru shareholder. Renaissance Technologies and Jones also have positions in the stock.

Green Brick Partners

Third Avenue bought 50,000 shares of Green Brick Partners for an average price of $10.94 per share, giving it 0.02% space in the equity portfolio.

The Denver-based real estate developer has a market cap of $489.45 million; its shares were trading around $9.65 on Thursday with a price-earnings ratio of 24.13, a price-book ratio of 1.17 and a price-sales ratio of 1.02.

The Peter Lynch chart below shows the stock is trading slightly above its earnings line, which suggests it is overpriced.

752951139.png

Supported by a strong Altman Z-Score of 3.84, Green Brick’s financial strength was rated 6 out of 10 by GuruFocus. Weighed down by a declining operating margin, the company’s profitability and growth was rated 4 out of 10. The company also has a weak Piotroski F-Score of 3, indicating poor business conditions.

With 47.55% of outstanding shares, David Einhorn (Trades, Portfolio) is the company’s largest guru shareholder. Daniel Loeb (Trades, Portfolio), John Rogers (Trades, Portfolio), Hotchkis & Wiley and Murray Stahl (Trades, Portfolio) are also shareholders.

Jernigan Capital

In its final trade for the quarter, the firm invested in 25,000 shares of Jernigan Capital for an average price of $18.91 per share. The trade had an impact of 0.02% on the equity portfolio.

The REIT, which is headquartered in Memphis, Tennessee, has a market cap of $351.78 million; its shares were trading around $18.27 on Thursday with a price-earnings ratio of 17.08, a price-book ratio of 0.97 and a price-sales ratio of 16.19.

According to the Peter Lynch chart below, the stock is overpriced since it is trading above the earnings line.

1164509725.png

GuruFocus rated Jernigan’s financial strength 6 out of 10. While the company has poor interest coverage and continues to issue new long-term debt, its Altman Z-Score of 5.2 indicates it is financially healthy. The company’s profitability and growth did not fare as well, scoring a 2 out of 10 rating. Not only does the operating margin underperform 81% of competitors, but the weak Piotroski F-Score of 3 indicates poor business operations. GuruFocus also cautions that it has poor earnings quality and continued operating income loss.

The firm holds 0.13% of the company’s outstanding shares.

Other trades

During the quarter, the firm also expanded many of its other positions, including Five Point Holdings LLC (NYSE:FPH), Warrior Met Coal Inc. (NYSE:HCC), Lennar Corp. (NYSE:LEN.B), Macerich Co. (NYSE:MAC) and Forest City Realty Trust Inc. (FCE.A).

Third Avenue’s equity portfolio, which is composed of 76 stocks, is largely invested in the real estate and financial services sectors. According to its fact sheet, the Third Avenue Value Fund underperformed its benchmark, the MSCI World Index, in 2017 with a return of 14.15%. The index posted a 23.07% return.

Disclosure: No positions.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneeg

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Performances of the stocks mentioned by Sydnee Gatewood


User Generated Screeners


muhua.huangmaster
mathew94Penny
mathew94Earning1Month
ralphdQuality Growth
salvatore34stock screener 2.0
DBrizanall 19SEP2018 942P
HOLKLSUEquity Income 2018 Q3 Energy a
althekear4+%20star,%20dividend%20champs
althekearQuality%20Growth
ivy.loui4+ star, dividend champs, >5%
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK