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 OceanFirst Financial Corp. (NASDAQ:OCFC) in its Q4 2024 investor letter. OceanFirst Financial Corp. (NASDAQ:OCFC) is a bank holding company for OceanFirst Bank N.A. that offers community banking services. The one-month return of OceanFirst Financial Corp. (NASDAQ:OCFC) was -3.24%, and its shares gained 10.03% of their value over the last 52 weeks. On February 3, 2024, OceanFirst Financial Corp. (NASDAQ:OCFC) stock closed at $17.33 per share with a market capitalization of $1.015 billion.
Third Avenue Small-Cap Value Fund stated the following regarding OceanFirst Financial Corp. (NASDAQ:OCFC) in its Q4 2024 investor letter:
“The Fund initiated two new positions during the quarter, OceanFirst Financial Corp. (NASDAQ:OCFC) and Ambac Financial Group (“AMBC”).
OceanFirst Financial (“OceanFirst”) is a regional bank headquartered in New Jersey. Founded in 1902, it represents one of the largest and oldest community-based financial institutions. The bank has recently ascended to “large institution” status under the Volcker Rule by surpassing $10 billion or more in assets. While the majority of the bank’s loan portfolio caters to local commercial real estate, it has maintained exceptional credit performance with historical net charge-off rates at just a small fraction of its peer commercial banks. To this point, OceanFirst was recently awarded investment grade status by Moody’s. We think highly of management and their deep expertise in the local commercial real estate markets they serve.
OceanFirst’s low-risk, low-net charge-off approach comes, symmetrically, with lower than industry returns on assets. Further, lending conservatism has manifested in a relatively slower rate of loan growth and the bank has historically maintained significant loan exposure to commercial real estate, which is today viewed with trepidation. Notwithstanding OceanFirst’s underwriting record in this area, across a wide range of economic conditions, this trait is contributing to a depressed valuation and the Fund’s ability to initiate its holding of OceanFirst at 62% of book value, or 89% of tangible book. On the other hand, OceanFirst has built a high-quality, very stable, and diversified deposit base catering to consumers, small business accounts, local government banking accounts, such as school districts and municipalities, and a well-diversified corporate cash management function…” (Click here to read the full text)
A corporate office building in the financial district, evidence of the bank’s success.
OceanFirst Financial Corp. (NASDAQ:OCFC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held OceanFirst Financial Corp. (NASDAQ:OCFC) at the end of the third quarter which was 17 in the previous quarter. While we acknowledge the potential of OceanFirst Financial Corp. (NASDAQ:OCFC) 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 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.