Here’s Why Third Avenue Small-Cap Value Fund Re-established a Position in Five Point Holdings (FPH)

Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Small-Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned -4.38% compared to -1.06% for the Fund’s most relevant benchmark, the Russell 2000 Value Index. For the year ended 31 December 2024, the fund returned +3.55% compared to +8.05% return for the Index. The fund’s cash holdings were 8% at the end of Q4 as compared to 12.9% as of September 30th, 2024. For more information on the fund’s top picks in 2024, please check its top five holdings.

Third Avenue Small-Cap Value Fund highlighted stocks like Five Point Holdings, LLC (NYSE:FPH), in the fourth quarter 2024 investor letter.  Five Point Holdings, LLC (NYSE:FPH) owns and develops mixed-use and planned communities. The one-month return of Five Point Holdings, LLC (NYSEE:FPH) was 65.05%, and its shares gained 79.53% of their value over the last 52 weeks. On February 4, 2024, Five Point Holdings, LLC (NYSEE:FPH) stock closed at $6.14 per share with a market capitalization of $912.57 million.

Third Avenue Small-Cap Value Fund stated the following regarding Five Point Holdings, LLC (NYSEE:FPH) in its Q4 2024 investor letter:

“Five Point Holdings, LLC (NYSEE:FPH) is a position the Fund re-established during the quarter. The U.S.-based real estate operating company focuses on coastal California where it controls strategic land positions in Los Angeles, San Francisco, and Irvine. In total, the company has plans for more than 40,000 residential homes and 23 million square feet of commercial properties in these supply-constrained markets, largely through its three primary mixed-use communities (i.e., Great Park, Valencia, and the Shipyards).

Although the company has undeniably valuable land positions that are modestly encumbered, Five Point has a mixed track record as a public company. That is to say, the company spent the first five years of its public existence operating with more elevated levels of corporate overhead relative to expectations. Further, somewhat evasive financial communications left many market participants desiring more clarity on the company’s strategy to unlock value. In addition, significant delays in its Shipyards community created uncertainty relating to the timing (and viability) of the development plans for San Francisco. As a result, Five Point’s book value per share declined modestly over its first five years of being listed, and its common stock experienced a significant “derating” relative to its residential peers…” (Click here to read the full text)

25 Most Expensive Neighborhoods in America

A birdseye view of a vibrant neighborhood, showcasing the diversity of residents living in a mixed-use community.

Five Point Holdings, LLC (NYSEE:FPH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Five Point Holdings, LLC (NYSEE:FPH) at the end of the third quarter which was 10 in the previous quarter. In the fourth quarter, Five Point Holdings, LLC (NYSE: FPH) reported a net income of $121 million and a total net income of $177.6 million for the entire year. While we acknowledge the potential of Five Point Holdings, LLC (NYSEE:FPH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article we discussed Five Point Holdings, LLC (NYSE:FPH) and shared the list of cheap penny stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.