Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Small-Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned 7.18% compared to 8.97% for the MSCI USA Small-Cap Value Index (the “Index”) and 12.60% return for the Russell 2000 Value Index. Positive contributions from a wide range of businesses led the fund’s performance in the quarter. For more information on the fund’s top picks in 2025, please check its top five holdings.
In its third-quarter 2025 investor letter, Third Avenue Small-Cap Value Fund highlighted stocks such as Ambac Financial Group, Inc. (NYSE:AMBC). Ambac Financial Group, Inc. (NYSE:AMBC) is a financial services holding company. The one-month return of Ambac Financial Group, Inc. (NYSE:AMBC) was 3.11%, and its shares lost 26.73% of their value over the last 52 weeks. On November 5, 2025, Ambac Financial Group, Inc. (NYSE:AMBC) stock closed at $8.28 per share, with a market capitalization of $384.206 million.
Third Avenue Small-Cap Value Fund stated the following regarding Ambac Financial Group, Inc. (NYSE:AMBC) in its third quarter 2025 investor letter:
“Ambac Financial Group, Inc. (NYSE:AMBC) (“Ambac”) is a position we have previously described as being in a state of significant transition. During the quarter, the company and Oaktree Capital Management finally received Wisconsin regulatory approval to complete the sale of Ambac’s legacy financial guarantee business to Oaktree. Although the approval arrived later than originally anticipated, the approval enabled a rapid closure of the transaction and a significant cash inflow to Ambac. In coming quarters, Ambac’s balance sheet will for the first time begin to reflect Ambac’s “go-forward” business. Less anticipated, however, was an announcement almost immediately thereafter disclosing that Ambac will purchase supplemental health program manager, ArmadaCare, from SiriusPoint Ltd. for $250 million, funded in large part with the proceeds from the sale of its financial guarantee business.
Further, the combination of these two proximate transactions will dramatically accelerate Ambac’s business transformation. The transformed Ambac will be highly focused on insurance distribution businesses through a portfolio of managing general agents (“MGA”) and managing general underwriters (“MGU”) whose focus is on generating business in specialized excess and surplus insurance lines. Financial releases from Ambac should, in the coming quarters, begin to reflect its focus on a business model that is relatively fast growing, high margin, has generally recurrent revenue and earnings, and generally assumes very little on-balance sheet risk and, therefore, relatively little capital intensity.
Finally, we think the cleaned up balance sheet, and newly found scale coming from the recent bout of resource conversion activity puts Ambac in a good strategic position to (i) grow volumes organically by expanding current and launching new MGAs, (ii) use cash from operations to increase their ownership interests in current MGA companies over time, (iii) reduce overhead expenses and (iv) accelerate the utilization of a very significant quantity of tax-loss carryforwards.”
Ambac Financial Group, Inc. (NYSE:AMBC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 26 hedge fund portfolios held Ambac Financial Group, Inc. (NYSE:AMBC) at the end of the second quarter, compared to 31 in the previous quarter. While we acknowledge the risk and potential of Ambac Financial Group, Inc. (NYSE:AMBC) 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 Ambac Financial Group, Inc. (NYSE:AMBC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Ambac Financial Group, Inc. (NYSE:AMBC) and shared the list of best beaten down stocks to buy. Third Avenue Small-Cap Value Fund initiated a position in Ambac Financial Group, Inc. (NYSE:AMBC) during Q4 2024. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
