Third Avenue Management: “Our Carter (CARE) Investment was not Pleasant”

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 Carter Bankshares, Inc. (NASDAQ: CARE) and emphasized their views on the company. Carter Bankshares, Inc. is a Martinsville, Virginia-based community bank that currently has a $362.3 million market capitalization. Since the beginning of the year, CARE delivered a 29.48% return, extending its 12-month gains to 51.20%. As of March 29, 2021, the stock closed at $13.71 per share.

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

“Conversely, the experience with the Carter investment was not pleasant. The bank’s turnaround has been slowed by lingering credit issues that were amplified during COVID due to the bank’s hospitality exposure. Our outlook on banks remains favorable, so redeploying the Carter proceeds into banks which have been impacted more by sentiment than fundamentals seemed like a prudent action to take.”

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Our calculations show that Carter Bankshares, Inc. (NASDAQ: CARE) 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, Carter Bankshares, Inc. was in 12 hedge fund portfolios, compared to 11 funds in the third quarter. CARE delivered a decent 24.60% return in the past 3 months.