In this article, we will be taking a look at the top 5 stock picks of Martin Whitman’s Third Avenue Management. To read our detailed analysis, you can go directly to see the Top 10 Stock Picks of Martin Whitman’s Third Avenue Management.
5. Brookfield Asset Management Inc. (NYSE:BAM)
Third Avenue Management’s Stake Value: $38.569 million
Number of Hedge Fund Holders: 35
Brookfield Asset Management Inc. (NYSE:BAM) is one of the biggest alternative investment management companies in the world, and has more than $725 billion of assets under management (AUM) operated by more than 150,000 employees globally. The stock price of Brookfield Asset Management Inc. (NYSE:BAM) has nose dived over the past several months, and recently reached a new 52 week low, even as Brookfield Asset Management Inc. (NYSE:BAM) expands into Europe and is being touted as having double digit growth potential.
Saltlight Capital published its Q1 2022 investor letter and mentioned Brookfield Asset Management Inc. (NYSE:BAM). Here is what the fund said:
“During times like this, it is always helpful to remember what your portfolio is built with. One company that we’ve alluded to in the past is Brookfield Asset Management (NYSE:BAM). We’ve been invested in BAM across our various funds since 2019 and could not describe a more ‘resilient, indispensable and durable’ portfolio company. BAM is one of the largest alternative asset managers in the world, but it has some nuances that make it screen poorly (we’ll get into that). It started life as an industrial conglomerate called Brascan in Canada and so in line with general Canadian culture is understated and stays out of the limelight.
Bruce Flatt has been the CEO for over two decades and is the type of manager that we seek to partner with: honest, trustworthy, and extremely capable. We highly recommend watching these two videos: a Google talk in 2018 and this David Rubenstein interview to get a sense of Flatt. Importantly, BAM is not just about Flatt and his singular investing skills as many asset managers are. This is a widely scaled business. We’ve been impressed with the caliber of up-and-coming executives operating the individual businesses which give us confidence that the BAM culture will be retained for many decades to come…” (Click here to see the full text)
4. Prologis, Inc. (NYSE:PLD)
Third Avenue Management’s Stake Value: $39.115 million
Number of hedge fund holders: 38
Prologis, Inc. (NYSE:PLD) is a real estate investment trust which became the biggest industrial real estate company in the globe after its merger with AMB Property Corporation. Huge news has come about recently about Prologis, Inc. (NYSE:PLD) merging with Duke Realty, in what will be a deal worth $26 billion, which will be welcomed by Vanguard Group, the biggest shareholder of Prologis, Inc. (NYSE:PLD). Prologis, Inc. (NYSE:PLD) has also been a huge benefiter of the pandemic, which has seen its business reach new heights, and this massive deal will only cement its position as the biggest REIT in the world.
3. Tidewater Inc. (NYSE:TDW)
Third Avenue Management’s Stake Value: $45.783 million
Number of hedge fund holders: 14
Tidewater Inc. (NYSE:TDW) is a marine transportation company, where it uses its fleet to provide marine and vessel services to offshore wind and offshore petroleum companies. Tidewater Inc. (NYSE:TDW) has been an exception in a trying year for the stock market, delivering more than 100% growth YTD.
Third Avenue Management published its ‘Small-Cap Value Fund’ Q1 2022 investor letter. Here is what it said:
“Within the Fund, a rapid rise in oil prices benefitted the investment in oil services company, Tidewater (NYSE:TDW), which more than doubled in price last quarter. The time-arbitrage/special-situations bucket is predominantly comprised of energy services company Tidewater, and other out of favor, misunderstood companies such as Hamilton Beach Brands. All of these companies are cyclical and currently out of favor, but given their strong financial positions, Fund Management believes they have the luxury of time and capital to invest and grow until the clouds dissipate.”
2. Warrior Met Coal, Inc. (NYSE:HCC)
Third Avenue Management’s Stake Value: $49.457 million
Number of hedge fund holders: 31
Warrior Met Coal, Inc. (NYSE:HCC) is a steel industry supplier, with two underground mines located in Alabama. Blackrock (NYSE:BLK) is the biggest holder of Warrior Met Coal, Inc. (NYSE:HCC), followed by Vanguard Group Inc. Warrior Met Coal, Inc. (NYSE:HCC) has been a part of controversy in its recent past as more than a year ago, 1,100 members of the United Mine Workers of America went on strike against the company due to a lack of agreement on labor contract. The strike still continues.
Meanwhile, Warrior Met Coal, Inc. (NYSE:HCC) has been enticed by higher coal prices to not just restart development of a mine but also to pay a special dividend to its shareholders which has led to prices increasing and the stock is up 32.77% in the year. It has fully repaid the trust of being one of the top stock picks of Martin Whitman’s Third Avenue Management, and makes up 6.73 of the company’s total portfolio.
Horos Asset Management, which is an investment management firm, published its Q3 2021 invest letter. Here is what is said:
“In addition, we trimmed our stake in the U.S. company Warrior Met Coal (“Warrior”), following its excellent recent performance. The metallurgical coal producer, which is necessary to produce steel in blast furnaces, benefited during the quarter from the sharp rise in the price of this commodity. Specifically, the price of Warrior’s metallurgical coal, referenced to Australia’s Premium Low-Vol FOB Hard Coking Coal, rose by 100% in the quarter and is up 300% from the lows of the beginning of the year, when it was trading at around 100 dollars per tonne. The reason for the huge price increase can be found in the bottleneck that this industry is experiencing, due to a few factors. On the one hand, the recovery of economic activity after the worst of the pandemic ended and the extra boost given by the huge fiscal and monetary stimuli from governments globally and, on the other hand, the lack of investment in new supply in recent years due to the hangover from previous overcapacity, the poor situation of some players in the industry and, especially, the political and social agenda against climate change.
This rise in the price of metallurgical coal has seen Warrior’s share price appreciate by more than 70% from last summer’s lows, contributing significantly to our fund’s performance. However, the downside of the story is that Warrior has had the bulk of its employees on strike since April, which means that the company is not producing at one of its two mines and the other is not at 100% capacity, so it is not benefiting from the current positive dynamics like other players in the industry.”
1. Five Point Holdings, LLC (NYSE:FPH)
Third Avenue Management’s Stake Value: $53.462 million
Number of hedge fund holders: 31
Consisting of 7.28% of the firm’s total portfolio, Five Point Holdings, LLC (NYSE:FPH) is the top stock pick of Martin Whitman’s Third Avenue Management. Five Point Holdings, LLC (NYSE:FPH) is engaged in the ownership and development of mixed use development communities in the state of California.
Despite being the top stock pick of Martin Whitman’s Third Avenue Management, 2022 has not been very kind to Five Point Holdings, LLC (NYSE:FPH) which recently announced that it was laying off 20% of its total workforce while posting a $37 million loss. In fact, the recent years have seen Five Point Holdings, LLC (NYSE:FPH) fail to make a profit, which has resulted in its share price declining by 34% over the past 3 years. However, whether this means that Five Point Holdings, LLC (NYSE:FPH) is undervalued or underperforming remains to be seen, and maybe Third Avenue Management has sight of something that the wider market has failed to grasp.
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
