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Third Avenue Reduces Stake in Waste Management Company

Martin Whitman‘s Third Avenue Management has cut its stake in Covanta Holding Corp (NYSE:CVA), according to a new filing with the Securities and Exchange Commission. The investor reported holding some 4.08 million shares of the company, down from more than 6.52 million shares held previously and reported in the latest 13F filing. Following the decrease of the stake, Third Avenue owns around 3.1% of Covanta’s outstanding common stock.


Third Avenue has been a long-term shareholder of Covanta Holding Corp (NYSE:CVA), owning shares since the third quarter of 2005 and earlier this year, it reported raising its stake to 6.60 million shares, which represented 5% of the company. The fund has seen the stock almost double in value and before cutting its stake it was one of the largest shareholders among institutional investors. Third Avenue prefers to invests in stocks with a low level of risk, which are usually companies with good management teams and are engaged in understandable businesses, and provide stable financial results.

With a $3 billion market cap, Covanta Holding Corp (NYSE:CVA) is one of the largest US-based waste management companies. It owns and operates facilities engaged in the conversion of waste to energy and also operates in the waste disposal and renewable energy production segments. Since the beginning of the year, its stock grew by more than 30%, outperforming the waste management industry that gained around 10% on average. Moreover, the stock trails a P/E of 122.00, which is significantly above the industry average of 50.00.

Among more than 700 funds that we track at Insider Monkey, 26 investors revealed holding shares of Covanta in the latest round of 13F filings. Interestingly, even though the number of investors declined from 30 funds that held shares at the end of the third quarter, the aggregate value of the shares held by these funds went up by $46.76 million to $664.34 million. The largest shareholders among the funds tracked by us is John A. Levin’s Levin Capital Strategies which held 10.59 million shares of Covanta Holding Corp (NYSE:CVA) at the end of September, up by 22% on the quarter. Thomas Bancrof’s Makaira Partners trimmed its stake by 6% during the third quarter to 3.16 million shares, but the stake amasses more than 11% of its total equity portfolio value.

In this way, Covanta Holding Corp (NYSE:CVA) represents an attractive target for investors that are looking for stocks with solid returns, as waste management companies are always in demand since it provides an essential service. Moreover, waste management is directly connected to the economic activity and the levels of industrial production, so if these two factors keep growing, companies that are involved in the industry are expected to prosper as well. So far, for Covanta Holding Corp (NYSE:CVA) the consensus analyst rating is ‘Buy’ and the average target price stands at close to $23.00, while among the latest moves, Barclays has downgraded the stock to ‘Equal Weight’ from ‘Overweight’ recently and has kept the price target at $24.00.

Disclosure: none