Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Third Avenue Management Loves Five Point Holdings LLC (NYSE:FPH)

Five Point Holdings LLC (NYSE:FPH) is an $801.38-million market cap company that develops mixed-use, planned communities in coastal California. In its Q4 Small Cap Investor Letter, Third Avenue Management disclosed that it added FPH to its portfolio during the fourth quarter, calling it “a compelling opportunity.” Here is the Third Avenue’s commentary about the company:

Residential real estate is an area where the fundamentals remain compelling. New U.S. home starts continue to lag demand and inventories are depressed in many areas; California in particular. Five Point went public in May 2017 and we were able to purchase shares at a discount to the IPO price as investors initially struggled with the complexities of the business structure.

Five Point is a well-capitalized owner and developer of mixed-use planned communities in coastal California. Our Real Estate team suggested we review it as it’s an investment in their fund. The Real Estate team is intimately familiar with their assets through their investments in both Newhall Land Development LLC and Lennar Corp. Given the value of the assets and the strong financial position, we think it is a compelling opportunity. Our timing was fortuitous as projects are beginning to generate cash flow.

We were also greeted with good news in November as Five Point reached a settlement on various legal challenges to the development of the Newhall Ranch properties which is a high barrier-to-entry market. We believe Five Point is a perfect addition to our long-term compounder bucket.

Great Park Neighborhoods/Credit:

Great Park Neighborhoods/Credit:

Aliso Viejo, California-based Five Point Holdings LLC (NYSE:FPH) is developing communities in Orange County, Los Angeles County, and San Francisco County. The communities are Great Park Neighborhoods in Irvine, Newhall Ranch near Valencia in Los Angeles County, and The San Francisco Shipyard/Candlestick Point in the City of San Francisco. These communities are planned to include about 40,000 residential homes and about 21 million square feet of commercial space.

Five Point went public in May last year, offering 21 million shares at $14 per share. Since then, the stock has dropped 14.83%. On Friday, the stock closed down 0.39% at $12.81 per share.

For the three months ended September 30, 2017, Five Point had revenues of $11.6 million, up 4.5% from $11.1 million for the same period of 2016. Whereas, the company booked a loss of $10.3 million, versus a loss of $19.1 million in 2016.

Meanwhile, there were 13 hedge funds in Insider Monkey’s database with positions in Five Point Holdings LLC (NYSE:FPH) as of the end of September.

Disclosure: none

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.