Third Avenue Management, an investment management company based in New York City, released its “Value Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. The fund’s performance was favorable in the quarter, and it returned 8.68% in the first quarter compared to a 7.88% return for the MSCI World Index and a 1.12% return for the MSCI World Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Third Avenue Value Fund highlighted stocks Comerica Incorporated (NYSE:CMA) in the first quarter 2023 investor letter. Headquartered in Dallas, Texas, Comerica Incorporated (NYSE:CMA) provides financial products and services. On June 9, 2023, Comerica Incorporated (NYSE:CMA) stock closed at $42.08 per share. One-month return of Comerica Incorporated (NYSE:CMA) was 31.62%, and its shares lost 44.08% of their value over the last 52 weeks. Comerica Incorporated (NYSE:CMA) has a market capitalization of $5.541 billion.
Third Avenue Value Fund made the following comment about Comerica Incorporated (NYSE:CMA) in its first quarter 2023 investor letter:
“The largest detractors from Fund performance during the quarter included two banks, Comerica Incorporated (NYSE:CMA) and Deutsche Bank. As it relates to the Fund specifically, events within U.S. banking applied most directly to our investment in Comerica, a U.S. super-regional that does have a large portion of corporate deposits and is not classified as a globally systemically important bank (“G-SIB”), which means it has not recognized certain mark-to-market securities losses in its regulatory capital. Comerica was a 2.6% position at the beginning of the quarter, prior to a roughly 34% stock price decline during the quarter. After purchasing more shares following the stock price decline, the Fund’s position in Comerica was approximately 2.3% at quarter end. While the general contagion fears and bank depositor behavior remain a fluid situation today, we took some confidence from immediate, forceful and targeted actions by the Fed, FDIC and Treasury. In our view, the Fed’s Bank Term Funding Program (“BTFP”) seems a well-tailored and appropriate near-term liquidity solution that allows banks to obtain immediate liquidity, collateralized by the par value of securities, to meet any near-term deposit outflows. At the time of this writing, early signs are that the deposit flight from regional banks is calming rapidly and depositor psychology is improving, though this could change. To the extent that calming continues, our suspicion is that there may be very attractive bargains to be had among regional banks. More will be known in the coming days and weeks as information regarding deposit flows emanates post-quarter end. That said, there will remain some mystery around the extent of the bargains on offer because increases in FDIC funding, increases in regulatory capital requirements, more stringent liquidity stress testing, and changes to the list of banks subject to G-SIB regulatory regimes are all on the table now. It is also very likely that deposit costs, which had been rising very slowly, will rise much more rapidly as commercial banks work harder to entice depositors to stay put. None of these developments, if they eventuate, are likely to impact banks’ returns and earnings in a positive way.
More broadly, the Third Avenue Value Fund owned investments categorized as financials totaling 15.94% by weight, at quarter end. This category includes non-bank financials such as Old Republic, a U.S. property and casualty insurer and title insurance business, Lazard, an advisory business and asset management firm, and Ashmore, a U.K. asset management firm specializing in emerging markets credit. The Fund’s actual bank exposure at quarter end totaled 9.52% and is comprised of Bank of Ireland, Deutsche Bank and Comerica, in order of position size…” (Click here to read the full text)
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Comerica Incorporated (NYSE:CMA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Comerica Incorporated (NYSE:CMA) at the end of first quarter 2023 which was 37 in the previous quarter.
We discussed Comerica Incorporated (NYSE:CMA) in another article and shared the list of undervalued S&P 500 stocks billionaires are loading up on. In addition, please check out our hedge fund investor letters Q1 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.
