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Top 10 Stock Picks of Martin Whitman’s Third Avenue Management

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·7 min read
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In this article, we will be taking a look at the top 10 stock picks of Martin Whitman's Third Avenue Management. To skip our detailed analysis on Third Avenue Management's stock picks and their performance, you can go directly to see Top 5 Stock picks of Martin Whitman's Third Avenue Management.

Martin Whitman was considered to be one of the most brilliant investors of his time, something confirmed by Forbes which gave tribute to Whitman in the following words:

No one dared to second-guess Marty. Whitman's ability to out-think anyone has long been a fearsome thing. No one to this day can keep up with his lickety-split ability to read and analyze a company's 10-K filing.

Whitman passed away in 2019 at the age of 93. However, Third Avenue Management has continued to flourish.

The firm, founded in 1990, has continued Whitman's philosophy of studying the core fundamentals of companies, by conducting bottom-up research, in order to recommend companies which have stable financials and are good long term holds while simultaneously being undervalued, and thus have the potential to provide high returns. It is the successful implementation of this philosophy that the fund declined by only 0.44% in Q1, as opposed to the Russel 2000 Value Index, which in the same time period delivered returns of -2.4%. Meanwhile, even the S&P500 index was down 5.53% in the first quarter.

Photo by Chris Liverani on Unsplash

Shareholders appreciate big returns in any economy, but in a year where, according to CNBC, the risk of a recession is growing and inflation continues to rise to record levels all across the globe while the impact of the Russia Ukraine war only adds fuel to the fire, barely declining at all is an achievement of its own. Third Avenue management avoided going for expensive companies which have exorbitant expectations already built into their share price, which is why it was able to deliver consistent results.

Among its important holdings are Fidelity National Financial, Inc. (NYSE:FNF) and Old Republican International Holdings (NYSE:ORI). On the other hand, you won't see many famous stocks which everyone is familiar with among the top stock picks of Martin Whitman's Third Avenue Management such as Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG) or Amazon.com, Inc. (NASDAQ:AMZN) as according to the firm, such stocks already reflect the future growth in their stock prices.

Methodology

We used Third Avenue's Q1 portfolio and picked the top 10 stocks.

10. AMERCO (NASDAQ:UHAL)

 

Third Avenue Management's Stake Value: $26.074 million

Number of Hedge Fund Holders: 28

 

Amerco (NASDAQ:UHAL) is U-Haul's parent company, which is the largest DIY company in North America. Despite year on year revenue increase of 26.37%, Amerco (NASDAQ:UHAL) has seen its share price fall by 36% YTD. While Amerco (NASDAQ:UHAL) has continued to increase the size of its fleet, it has admitted that it's been unable to achieve its target due to manufacturing concerns and supply issues, which is a major issue across the world right now.

Third Avenue Management published its Real Estate Value Fund Q1 2022 investor letter and mentioned Amerco . Here is what it said:

“Held in the Fund since 2018, AMERCO is widely recognized as the leader in self-moving in North America through its U-Haul subsidiary where it has an unrivaled network with approximately 176,000 trucks, 126,000 trailers, and 46,000 towing devices available across more than 23,000 locations. What is not as widely recognized, in Fund Management’s opinion, is that the company’s forward thinking management team has also spent the last decade assembling one of the largest self-storage portfolios in North America-not only solidifying the “moat” around its core business but also creating substantial value in the process.

Due to these efforts, AMERCO owned and managed more than 73 million square feet of self-storage facilities at the end of the 2021, placing it as the third largest owner of such properties in the US. Notwithstanding, the company does not seem to get much (if any) recognition for this transformation. To wit, if one were to apply the implied price per square foot for AMERCO’s closest comparable on the self-storage side of the business (e.g., Life Storage), they would arrive at an implied value for its impossible-to-replicate self-moving business of basically $0- despite it generating more than $1.0 billion of operating profits per year more recently, implying $7-8 billion of value based upon comparables within the rental segment."

9. Weyerhaeuser Company (NYSE:WY)

 

Third Avenue Management's Stake Value: $29.055 million

Number of Hedge Fund Holders: 42

 

Weyerhaeuser Company (NYSE:WY) is a timberland company which owns more than 12.4 million acres of timberlands in just the US, with an additional 14 million acres licensed in Canada. In line with the overall market's performance, Weyerhaeuser Company (NYSE:WY) stock price has declined over the past month, by more than 10%. However, recently the company did gain slightly while the overall market declined, giving hope to Weyerhaeuser Company's (NYSE:WY) shareholders that better times may be on the horizon.

8. Comerica Incorporated (NYSE:CMA)

 

Third Avenue Management's Stake Value: $29.952 million

Number of Hedge Fund Holders: 42

 

Comerica Incorporated (NYSE:CMA) is a financial services firm which has its headquarters in Texas, while maintaining retail banking operations in several states including Arizona, Michigan, Texas, Florida and California. Even though Comerica Incorporated (NYSE:CMA) is one of the few retail banking operations which didn't have to consolidate its branches during the pandemic, it recently announced that it would be closing 5% of its branches, or 22 locations. Most of the branches being closed are in Michigan, and the company stated that this move was to reduce its footprint while offering more flexibility to its employees.

Meanwhile, Truist Financial analysts have reduced their target price of Comerica Incorporated (NYSE:CMA) to $98 from $103, while on March 24th, Citigroup, in a research report, initiated a coverage of shares, and issued a 'Buy' rating on the stock. If the share price does hit $98, that would mean a 30.95% upside from its latest close.

7. Rayonier Inc. (NYSE:RYN)

 

Third Avenue Management's Stake Value: $31.349 million

Number of Hedge Fund Holders: 18

 

The top stock picks of Martin Whitman's Third Avenue Management do seem to focus on timberland, as Rayonier Inc. (NYSE:RYN) is another timberland company in the list. Some good news for its holders is that Rayonier Inc. (NYSE:RYN) increased dividend to $0.29 per share in its quarterly dividend announcement. Even though the stock has taken a beating in recent months, its fundamentals look strong enough to weather the storm and could emerge as a good pick. Currently, the Vanguard Group is the biggest owner of Rayonier Inc. (NYSE:RYN), with more than 14% of the total capital.

6. Lennar Corporation (NYSE:LEN)

 

Third Avenue Management's Stake Value: $32.432 million

Number of Hedge Fund Holders: 61

 

Lennar Corporation (NYSE:LEN), a home construction company, and based on the number of homes sold, the second-largest such company in the US, is a hedge fund favorite, with 61 funds owning shares of the company as of Q1. According to CNN, institutional investors are the biggest owners of Lennar Corporation (NYSE:LEN), holding 94.36% of the total outstanding shares. Of these institutional investors, the biggest is unsurprisingly Vanguard, holding 10.85% of the total shares. Easily making the top stock picks of Martin Whitman's Third Avenue Management, Lennar Corporation (NYSE:LEN) makes up 4.41% of the firm's total portfolio.

 

Click to continue reading and see Top 5 Stock Picks of Martin Whitman's Third Avenue Management.

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Disclosure. None. Top 10 Stock Picks of Martin Whitman's Third Avenue Management is originally published on Insider Monkey.