The Whitman School of Management of Syracuse University is named after Martin Whitman, who graduated from Syracuse in 1949. Whitman is the founder, Co-Chief Investment Officer, and Portfolio Manager of the Third Avenue Management. He is a critic of the direction of recent changes in GAAP and expressed his critiques in his letters to shareholders. He also criticizes the “free market” concept though he advocates capitalism. Whitman usually invests in relatively smaller cap stocks where he is more likely to have an edge to beat the market.
Top 20 positions in the 13F portfolio of Third Avenue Management as of September 30, 2011
Company Name | Ticker | Value | Activity |
BROOKFIELD ASSET MAN | 335042 | -3% | |
POSCO | 334302 | 0% | |
FOREST CITY ENTERPRISES | 212910 | 3% | |
BANK OF NEW YORK | 187514 | 3% | |
COVANTA HOLDING | 140679 | 0% | |
TEJON RANCH CO | 114230 | -1% | |
WEYERHAEUSER CO | 109778 | 9% | |
TELLABS INC | 109546 | 23% | |
ENCANA CORP | 95134 | 3% | |
CENOVUS ENERGY INC | 94228 | -2% | |
KEYCORP NEW | 84891 | 4% | |
SYCAMORE NETWORKS | SCMR | 76423 | -1% |
LEUCADIA NATIONAL | 74147 | 0% | |
BRISTOW GROUP INC | 70740 | 6% | |
A V X CORP NEW | 68811 | -1% | |
KINROSS GOLD CORP | 62906 | 4% | |
LOWES COMPANIES INC | 59098 | 244% | |
APPLIED MATERIALS INC | 52498 | 37% | |
NEWMONT MINING CORP | 50587 | -1% | |
VORNADO REALTY TRUST | 49381 | -25% |
During the third quarter, Whitman reduced the value of his 13F portfolio from $4.9 at the end of June to $4.0 billion at the end of September. Though the total value of the portfolio was lower, Third Avenue had more positions (117 vs. 104). Whitman sold out one position over the third quarter. At the end of June, Third Avenue had $189,000 invested in HKN Inc (HKN). The fund did not report owning any shares of HKN at the end of September.
On the other hand, Whitman also opened some new positions. The biggest position the fund opened during the third quarter is America Eagle Outfitters Inc (AEO). Third Avenue initiated a brand new $22 million position in AEO over the third quarter. The stock returned 31.13% so far since the end of September, beating the 12.50% for SPY by a large margin. Whitman also bought new stakes in General Growth Properties Inc (GGP), Sensient Technologies Corp (SXT), and Aeropostale Inc (ARO).
Whitman increased his stakes in Bank of New York Mellon Corp (BK) by 3% during the third quarter. At the end of September, Third Avenue reported to own $188 million worth of the BK shares. Since then, BK returned 8.72%. It has a market cap of $24.2B and a P/E ratio of 9.25. Warren Buffett is bullish about BK as well. At the end of September, Berkshire Hathaway had $33 million invested in this stock.
Another large-cap stock that Whitman is bullish about is Lowes Companies Inc (LOW). Over the third quarter, Third Avenue boosted its stakes in this stock by 244% to $59 million. LOW returned 32.95% since the end of September, beating the market by more than 20 percentage points. Bill Ackman’s Pershing Square also initiated a brand new $400+ million LOW over the third quarter.
Most of the top 10 positions of Third Avenue did not perform so well in the fourth quarter compared to the market. But most of these stocks have relatively low P/E ratios, indicating that the stocks have more potential to grow in the future. We like Whitman and we strongly recommend investors to do some in-depth research on the stocks that Whitman is bullish about.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
