Here’s Why Third Avenue Proactively Decided to Exit their Argan (AGX) Position

Third Avenue Management, an investment management firm, published its “Small-Cap Value Fund” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 24.04% was recorded by the fund in the fourth quarter of 2020, below its Russell 2000 Value benchmark that delivered a 33.36% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Third Avenue Management, in their Q4 2020 investor letter, mentioned Argan, Inc. (NYSE: AGX) and emphasized their views on the company. Argan, Inc. is a Rockville, Maryland-based construction engineering company that currently has a $801.9 million market capitalization. Since the beginning of the year, AGX delivered a 14.88% return, extending its 12-month gains to 47.84%. As of March 29, 2021, the stock closed at $51.11 per share.

Here is what Third Avenue Management has to say about Argan, Inc. in their Q4 2020 investor letter:

“Argan was a satisfactory investment for Fund shareholders. We became concerned though that parts of the thesis were not playing out, and proactively decided to exit the position and redeploy the proceeds into companies where we had higher conviction.”

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Our calculations show that Argan, Inc. (NYSE: AGX) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Argan, Inc. was in 14 hedge fund portfolios, compared to 13 funds in the third quarter. AGX delivered a decent 14.42% return in the past 3 months.