Third Avenue Management’s Q1 2019 Investor Letter

Third Avenue Management is an NYC-based hedge fund founded by Martin Whitman back in 1990. Since 2002, it operates as a subsidiary of Affiliated Managers Group Inc. The fund offers investment services via ‘40Act mutual funds and customizes accounts covering three main strategic principles – Value, Real Estate, and Small-Cap. Martin J. Whitman, who died a year ago, was known for its “safe and cheap” investment philosophy. The fund recently released its Q1 2019 Investor Letter, which you can download below. For the quarter, it reported return of 12.60% for its Third Avenue Value Fund, versus 12.65% for its benchmark, the MSCI World Index.

 

Dear Fellow Shareholders,

For t he three months ended March 31st 2018, t e Third Avenue Value Fund (the “Fund”) returned 12.60%, compared to the MSCI World Index, which returned 12.65%1. Strong performance during the period continued into early April and represents a substantial recovery from a very challenging end to calendar 2018. Not with standing strong performance year to date, we continue to view the Third Avenue Value Fund’s holdings to be deeply underappreciated and undervalued.

The Third Avenue Management investment philosophy revolves around our pursuit of significantly undervalued securities. The presence of low prices, not surprisingly, is frequently associated with a relatively poor near-term outlook for an industry, company or country. By definition, this approach is contrarian in nature, is more price-conscious than out look-conscious, and requires a multi-year investment horizon. Further, cheapness itself, while critical to our investment approach, is not a sufficient condition for investment . In addition to the margin of safety provided by paying discounted prices, we strive to provide additional elements of safety through rigorous analysis of a company’s financial position, conservative estimates of business value, a healthy dose of skepticism as it relates to t he ability to make accurate long-term forecasts, and avoidance of secular business decline and obsolescence risks. Regarding this form of value investing, in which there are a relatively limit ed number of practitioners, it is often said that the opportunities find us, rather than us finding them. Said another way, the investment approach is reactive to the opportunity set presented.

 

You can download a copy of Third Avenue Management’s Q1 2019 Investor Letter here:

TAVFX-1Q19-Letter

You can also see the list of our 2019 Q1 investor letters and download them on this page.