Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Real Estate Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. For the six months ended June 30, 2025, the fund returned +6.38% (after fees) compared to +6.66% (before fees) for the FTSE EPRA NAREIT Developed Index. The fund generated an annualized return of +8.94% (after fees) since its inception in 1998. For more information on the fund’s top picks in 2025, please check its top five holdings.
In its second-quarter 2025 investor letter, Third Avenue Real Estate Value Fund highlighted stocks such as Champion Homes, Inc. (NYSE:SKY). Champion Homes, Inc. (NYSE:SKY) engages in the manufacturing and sales of mobile homes and other manufactured housing. The one-month return of Champion Homes, Inc. (NYSE:SKY) was 1.93%, and its shares lost 16.05% of their value over the last 52 weeks. On August 7, 2025, Champion Homes, Inc. (NYSE:SKY) stock closed at $69.15 per share, with a market capitalization of $3.961 billion.
Third Avenue Real Estate Value Fund stated the following regarding Champion Homes, Inc. (NYSE:SKY) in its second quarter 2025 investor letter:
“In addition, the Fund initiated positions in Champion Homes, Inc. (NYSE:SKY) and Jardine Matheson Holdings Ltd. (“Jardine”), both of which are very well-capitalized and particularly well positioned for these fundamental shifts, in our opinion.
Champion Homes is a leading producer of “factory-built” housing in North America, having delivered more than 26,000 manufactured homes, modular homes, and accessory dwelling units (“ADU’s”) last year. While the company offers a wide array of brands (e.g., Titan, Champion, Skyline, et al), there is one common theme across its nationwide footprint: affordability. In fact, the average sales price for Champion’s deliveries was less than $100,000 more recently. At the same time, the company maintains a focus on financial strength with more than 30% of its assets in cash and de minimis levels of debt.
Champion also operates with significant scale after merging with industry-peer Skyline in 2018—a tie-up that established the second largest position in terms of market share, only trailing Clayton Homes (a wholly-owned subsidiary of Berkshire Hathaway). That said, Champion seems to be much earlier on in its journey to capture the economics throughout the value chain given this scale. For instance, the company has only recently entered the financing business, a long-time source of profitability for other industry players. It also seems to be in the early phases of consolidating independent retailers into captive sales outlets—one of the staples of the Clayton Homes model.
Despite these attributes, Champion’s results have been mixed more recently with easing order activity and various cost pressures. As a result, Champion’s common stock was trading near five-year lows on most fundamental metrics and less than seven times peak earnings (after adjusting for the excess cash). Such a price seems quite modest for a leading platform in a consolidated and essential industry, in our view. It is also an implied valuation that does not seem to factor in any probability for a recovery in industry volumes—which could be aided by regulatory reform (i.e., HUD’s chassis requirements) and disproportionately benefit Champion given its under-utilized production capacity.”
A close up of the exterior of a factory-built home.
Champion Homes, Inc. (NYSE:SKY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Champion Homes, Inc. (NYSE:SKY) at the end of the first quarter, which was 24 in the previous quarter. While we acknowledge the risk and potential of Champion Homes, Inc. (NYSE:SKY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Champion Homes, Inc. (NYSE:SKY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Champion Homes, Inc. (NYSE:SKY) and shared the list of best residential construction stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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