Martin Whitman's Third Avenue Buys 6 Stocks in Q4

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Jan 02, 2015
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Martin Whitman (Trades, Portfolio) is the chairman of the board of Third Avenue Management (Trades, Portfolio), which seeks opportunistic investments. In his fourth quarter letter, Whitman highlighted the risk-aversion and emphasis on high-quality securities that characterize Third Avenue’s investing style:

“One point about low turnover value mutual funds, such as those which are an integral part of TAM: an investor ought to look at more than past performance. Importantly, what kind of protections do funds, such as Third Avenue Value Fund provide against financial catastrophe? I think a lot. First, if the Fund’s portfolio consists largely of the common stocks of well-financed companies, bad times such as 2008 provide well-managed companies with opportunities to make highly attractive acquisitions of companies and assets such as was the case, among others, for Brookfield Asset Management and Wheelock & Company in 2008 and 2009. Second, most of the time, for most of the common stocks of companies held in the portfolio of any mutual fund, NAV will be higher in the next reporting period than it was in the prior period. This offers no guaranty of favorable market price behavior for the mutual fund, but it may tend to put the long-term odds in favor of good fund stock price performance.”

The Third Avenue Value Fund contains 38 stocks, valued at $2.1 billion, as of Oct. 31, 2014. The largest sector represented was Financial Services at 25.1% its holdings, followed by Real Estate at 14.6%.

In the fourth quarter of 2014, Whitman’s Third Avenue chose six new stocks for the portfolio: General Motors Co. (GM, Financial), CBS Corp (CBS, Financial), Loews Corp (L, Financial), Target Corp (TGT, Financial), Brookdale Senior Living Inc. (BKD, Financial) and Valmont Industries Inc. (VMI, Financial).

General Motors Co. (GM, Financial)

Whitman purchased 1,406,100 shares of General Motors, a 2.1% portfolio weight. The stock’s share price for the quarter averaged $32.

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General Motors Co. was incorporated as a Delaware corporation in 2009. General Motors Co. has a market cap of $55.78 billion; its shares were traded at around $34.72 with a P/E ratio of 22.70 and P/S ratio of 0.40. The dividend yield of General Motors Co. stocks is 3.40%.

CBS Corp (CBS, Financial)

Third Avenue purchased 809,000 shares of CBS Corp, a 2.1% portfolio weight. The stock’s price for the quarter averaged $53 per share.

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CBS Corp was organized in Delaware in 1986. It is a mass media company. CBS Corp has a market cap of $28.34 billion; its shares were traded at around $54.68 with a P/E ratio of 10.40 and P/S ratio of 2.30. The dividend yield of CBS Corp stocks is 1.0%. CBS Corp had an annual average earnings growth of 26.6% over the past five years.

Loews Corp (L, Financial)

Third Avenue purchased 962,488 shares of Loews Corp in the quarter, making it 2% of the portfolio. The stock’s price for the quarter averaged $42 per share.

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Loews Corp was incorporated in 1967 and is an insurance holding company. Loews Corp has a market cap of $15.61 billion; its shares were traded at around $41.71 with a P/E ratio of 85.70 and P/S ratio of 1.10. The dividend yield of Loews Corp stocks is 0.60%. Loews Corp had an annual average earnings growth of 4.60% over the past 10 years.

Target Corp (TGT, Financial)

Third Avenue purchased 616,405 shares of Target Corp, making it 1.9% of the portfolio. Target’s price for the quarter averaged $67 per share.

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Target Corp was incorporated in Minnesota in 1902. The company is engaged in operating general merchandise discount stores in the United States. Target Corp has a market cap of $47.77 billion; its shares were traded at around $74.99 with a P/E ratio of 31.30 and P/S ratio of 0.70. The dividend yield of Target Corp stocks is 2.5%. Target Corp had an annual average earnings growth of 7.7% over the past 10 years. GuruFocus rated Target Corp the business predictability rank of 3.5-star.

Brookdale Senior Living Inc. (BKD, Financial)

Third Avenue purchased 822,000 shares of Brookdale Senior Living Inc. in the quarter, making it 1.3% of the portfolio. The stock’s price averaged $34 for the quarter.

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Brookdale Senior Living Inc. was formed as a Delaware corporation in June 2005. Brookdale Senior Living Inc. has a market cap of $6.72 billion; its shares were traded at around $36.66 with and P/S ratio of 1.50. Brookdale Senior Living Inc. had an annual average earnings growth of 11.10% over the past 10 years.

Valmont Industries Inc. (VMI, Financial)

Whitman purchased 165,180 shares of Valmont Industries Inc. in the quarter, making it 1.1% of the portfolio. The stock’s price averaged $134 per share for the quarter.

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Valmont Industries Inc. was founded in 1946, and became public in 1968. Valmont Industries Inc. has a market cap of $3.13 billion; its shares were traded at around $127.20 with a P/E ratio of 17.10 and P/S ratio of 1.10. The dividend yield of Valmont Industries Inc. stocks is 1.1%. Valmont Industries Inc. had an annual average earnings growth of 18.7% over the past 10 years. GuruFocus rated Valmont Industries Inc. the business predictability rank of 5-star.

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