Highlights From Third Avenue’s Investor Letters

Weyerhaeuser Co. (NYSE:WY) is a Real Estate Investment Trust (REIT), with its principal line of business being ownership of more than 7 million acres of timberland in the U.S. and Canada. Weyerhaeuser was the fund’s largest position at the end of June and continues to perform well following its merger with Plum Creek. Third Avenue thinks that the strength in the housing and real estate markets bodes well for the stock in the near-to-medium-term. Weyerhaeuser Co. (NYSE:WY) is led by strong management and has made a number of cost reduction initiatives in the recent past. Third Avenue thinks that the REIT has strong potential for its wood products in the future and thinks that Weyerhaeuser Co. (NYSE:WY) is one of the best investments in the global real estate market. About 30 hedge funds in our database held more than 7% of the company’s outstanding stock as of June 30.

Rayonier Inc. (NYSE:RYN) is another timberland REIT in which Third Avenue has a large position. Similar to Weyerhauser, Rayonier has extensive holdings of timberland in the U.S. and New Zealand. The company owns, leases and manages over 2.7 million acres of timberland located in the Southern United States (over 1.9 million acres), the Pacific Northwest (over 372,000 acres) and New Zealand (over 439,000 gross acres). Third Avenue held more than $101.9 million in Rayonier shares on June 30, making it one of the fund’s largest holdings. Rayonier Inc. (NYSE:RYN) has done well over the past year, returning over 17% and considerably outperforming the broader S&P 500 index. The $3.2 billion REIT also provides a solid dividend yield of more than 3.7%. While the number of hedge funds in our system long Rayonier Inc. (NYSE:RYN) declined to ten as of June 30 from 12 a quarter earlier, the value of their holdings increased to $362 million from $343 million during that time.

Lennar Corporation (NYSE:LEN) is one of the largest homebuilders in the U.S. and one which Third Avenue is bullish on, owning more than $49 million of Lennar shares at the end of June. Lennar Corporation (NYSE:LEN) operates in four segments – Homebuilding Operations, Financial Services, Rialto, and Multifamily Operations. While its stock performance has not been good over the past year, with the stock declining by around 20%, its valuation is attractive, with a P/E of less than 11-times. Out of the 18 analysts who cover the stock, seven rate it as a ‘buy’, while none have a ‘sell’ rating on it. Lennar Corporation (NYSE:LEN) recently bought WCI Communities in a deal worth $643 million. As of June 30, 40 hedge funds from within our database held long positions in the stock, with an aggregate value of $1.19 billion.

Disclosure: None