Third Avenue Management, an investment management company based in New York City, released its “Small-Cap Value Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. Unlike the volatile first quarter, there was a methodological increase in returns in the second quarter. The fund returned 2.98% in Q2 compared to a 3.18% return for the Russell 2000 Value Index. For the first half of 2023, the fund returned 7.27% compared to 2.50% for the benchmark. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Third Avenue Small-Cap Value Fund highlighted stocks like Investors Title Company (NASDAQ:ITIC) in the second quarter 2023 investor letter. Headquartered in Chapel Hill, North Carolina, Investors Title Company (NASDAQ:ITIC) engages in the issuance of residential and commercial title insurance. On July 31, 2023, Investors Title Company (NASDAQ:ITIC) stock closed at $156.55 per share. One-month return of Investors Title Company (NASDAQ:ITIC) was 6.50%, and its shares gained 2.85% of their value over the last 52 weeks. Investors Title Company (NASDAQ:ITIC) has a market capitalization of $297.072 million.
Third Avenue Small-Cap Value Fund made the following comment about Investors Title Company (NASDAQ:ITIC) in its second quarter 2023 investor letter:
“Investors Title Company (NASDAQ:ITIC) was added to the portfolio in the second quarter. The investment thesis is highlighted below. Investors Title (ITIC) is a company Fund Management has known and admired for years, but it did not meet our strict valuation criteria to justify an investment. Luckily, as the valuation approached book value in the second quarter, it provided an opportunity to initiate a position.
ITIC is a North Carolina based title insurer. The Fine family owns 29% of the shares and has relied on predominantly organic growth to build the company over the past 50 years. ITIC has many attributes we admire including high insider ownership, a conservative operational culture, a concentrated industry structure and visible growth potential. The shares have been under pressure due to short-term industry concerns versus company specific issues. Given rising interest rates causing a slowdown in refinancing activity, the share price declined 50% from previous highs. Trading close to book value, we thought it presented a positive asymmetric risk/return opportunity. ITIC has compounded book value at double-digit rates over long periods of time. The underwriting history is stellar and, given the footprint in faster growing geographies such as the Carolina’s, Georgia and Texas, it has been able to grow organically. The balance sheet provides an additional layer of safety with healthy reserves, and no debt. Over longer periods of time, ITIC has traded at a 50% premium to tangible book value. We expect a reversion to historical valuation levels over time given the strong operational history. Two additional catalysts are additive to the investment thesis. First, ITIC management is highly disciplined about returning excess capital through either share buybacks or special dividends. We are confident capital will be returned to us during our ownership. Second, ITIC’s founder is 88 years old and his two sons are over 55. At some point they may choose to sell to a larger competitor given the concentration in the industry.”
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Investors Title Company (NASDAQ:ITIC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held Investors Title Company (NASDAQ:ITIC) at the end of first quarter which was 5 in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2023 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.
