Martin Whitman’s fund, the Third Avenue Asset Management, made a relatively early release of his fund’s third quarter portfolio this week. While Whitman no longer manages the funds at Third Avenue, he continues to write the shareholder letter each quarter. Third Avenue focuses on valuing its stocks from the bottom up, focusing on the “creditworthiness,” the ability for the “issuer to grow net asset value (NAV)” and the stock’s price in relation to its NAV.
Over the duration of the third quarter the portfolio managers at Third Avenue bought 16 new stocks bringing the fund’s total to 146 stocks valued at $4.766 billion.
The following five companies represent the stocks that Third Avenue holds the largest stake in:
Weyerhaeuser (WY)
The guru valued fund holds on to the largest stake in Weyerhaeuser. The fund holds on to a total of 9,722,375 shares of the company’s stock, representing 6.5% of their total portfolio holdings as well as 1.84% of the company’s shares outstanding.
Over the past quarter the fund increased its holdings 3.71% by purchasing a total 348,174 shares of the company’s stock. The guru added these shares near the estimated average quarterly price of $32.83 per share. From this average price the price per share is trading up about 3.3%.
Check out Third Avenue’s historical holdings here:
Weyerhaeuser It is a private owner of timberlands. It manages these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. It is also one of the manufacturers of wood and specialty cellulose fibers products, and develops real estate, primarily as a builder of single-family homes.
Weyerhaeuser’s historical revenue and net income:
The analysis on Weyerhaeuser reports that the company’s revenue per share has been in decline over the past three years, its Piotroski F-Score is high and the company’s dividend yield is near a 2-year high. The analysis also notes that the company’s price is sitting near a 10-year high.
The Peter Lynch Chart suggests that the company is currently overvalued:
Weyerhaeuser has a market cap of $17.78 billion. Its shares are currently trading at around $33.90 with a P/E ratio of 11.30 and a P/S ratio of 2.20. The company had an annual average earnings growth of 59.80% over the past five years.
Bank of New York Mellon Corp (BK)
Third Avenue’s second largest position is in Bank of New York Mellon Corp. The guru holds on to a total of 4,491,797 shares, representing 0.4% of the company’s shares outstanding and 3.6% of their total portfolio.
During the third quarter the fund reduced its position -10.67% by selling a total of 536,747 shares of the company’s stock. They sold these shares at near an estimated average quarterly price of $38.90. Since then the price per share has increased about 2%.
Third Avenue’s holding history as of the third quarter:
The company is a global financial services company. Bank of New York Mellon provides a comprehensive array of services that enable institutions and individuals to manage and service their financial assets in more than 100 markets worldwide.
Bank of New York Mellon’s historical revenue and net income:
The analysis on BK reports that the company’s dividend yield is at a two-year low, its price is nearing a three-year high, they have issued $3.2 billion of debt over the past three years and the company’s interest coverage is comfortable.
The Peter Lynch Chart suggests that the company is currently overvalued:
Bank of New York Mellon Corp has a market cap of $44.66 billion. Its shares are currently trading at around $39.67 with a P/E ratio of 16.40, a P/S ratio of 2.87 and a P/B ratio of 1.20. The company holds a dividend yield of 1.66% and has had an annual average earnings growth of 6.40% over the past five years.
POSCO (PKX)
Third Avenue Asset Management also holds a 3.1% stake in POSCO. The guru fund owns a total of 1,927,486 shares of POSCO, representing 0.55% of the company’s shares outstanding.
Over the third quarter Whitman’s fund cut their holdings -16.95% by selling a total of 393,519 shares. He sold these shares in the price range of $71.97 and $86.37 per share, with an estimated average quarterly price of $79.95 per share. Since then the price per share has dropped approximately-15.1%.
Third Avenue’s holding history as of the third quarter:
POSCO is engaged in the manufacturing and distribution of steel rolled products and plates in the domestic and overseas markets. It manufactures and sells a line of steel products such as plates, wire rods, hot and cold rolled products and stainless steel products.
POSCO’s historical revenue and net income:
The analysis on POSCO reports that the company has a poor buyback record that it has issued KRW10.7 billion of debt over the past three years and its price has been in decline over the past year.
The Peter Lynch Chart suggests that the company is currently overvalued:
POSCO has a market cap of $27.31 billion. Its shares are trading at around $78.16 with a P/E ratio of 18.40, a P/S ratio of 0.41 and a P/B ratio of 0.67. The dividend yield of POSCO stocks is 0.40%.
GuruFocus rated the company the business predictability rank of 5-star.
Brookfield Asset Management (BAM)
The fund’s fourth largest position is in Brookfield Asset Management where they hold on to 3,034,328 shares of the company’s stock. This position makes up for 2.9% of Third Avenue’s total assets managed as well as 0.49% of the company’s shares outstanding.
Over the past quarter the fund cut his holdings -9.32% by selling a total of 311,690 shares of the company’s stock. The fund sold these shares near the estimated average quarterly price of $46.04 per share. Since then the price per share is trading up about 7.8%.
Third Avenue’s historical holding history:
Brookfield Asset Management is a global alternative asset management company with over $175 billion in assets under management. The company organizes its business into a number of operating platforms that are responsible for managing the assets.
Brookfield Asset Management’s historical revenue and net income:
The analysis on Brookfield reports that the company has issued $7.5 billion of debt, its asset growth is faster than its revenue growth and its revenue per share has slowed down over the past year. The analysis also notes that the company’s price is near a 10-year high and its operating margin is expanding.
The Peter Lynch Chart suggests that the company is currently undervalued:
Brookfield Asset Management has a market cap of $30.59 billion. Its shares are currently trading at around $49.61 with a P/E ratio of 12.80 and a P/S ratio of 1.63. The company had an annual average earnings growth of 14.30% over the past ten years.
Covanta Holding Corp (CVA)
Third Avenue’s fifth largest position is in Covanta Holding Corporation. The fund maintains a total of 6,522,428 shares of the company’s stock. Its position in Covanta represents 4.98% of the company’s shares outstanding and 2.9% of their total portfolio.
Third Avenue cut their holdings -1.51% by selling 100,000 shares of their stocks. The fund sold these shares near the estimated average quarterly price of $20.86 per share. Since then the price per share has increased 15.2%.
Third Avenue’s holding history as of the third quarter:
Covanta Holdings is a developer, owner and operator of infrastructure for the conversion of waste to energy, as well as other waste disposal and renewable energy production businesses. It conducts all of its operations through subsidiaries which are engaged predominantly in the businesses of waste and energy services.
Covanta Holdings’ historical revenue and net income:
The analysis on Covanta reports that the company’s operating margin is expanding, its dividend yield is near a 1-year high and its revenue per share has slowed down over the past year. The analysis also notes that the company’s price is near a 5-year high.
The Peter Lynch Chart suggests that Covanta Holdings is currently overvalued:
Covanta Holdings has a market cap of $3.15 billion. Its shares are currently trading at around $24.04 with a P/E ratio of 123.30, a P/S ratio of 1.88 and a P/B ratio of 3.25. The company had an annual average earnings growth of 8% over the past ten years.
Check out Third Avenue’s complete third quarter holdings here.
