Third Avenue Management, an investment management company based in New York City, released its “Small-Cap Value Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. The fund generated positive results in a challenging market environment in the third quarter. The fund returned 3.88% in Q3 compared to a 2.96% decline for the Russell 2000 Value Index. During the initial nine months of 2023, the fund returned 11.43% compared to a 0.53% drop 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 LSB Industries, Inc. (NYSE:LXU) in the third quarter 2023 investor letter. Headquartered in Oklahoma City, Oklahoma, LSB Industries, Inc. (NYSE:LXU) engages in the manufacturing, marketing, and sale of chemical products. On October 25, 2023, LSB Industries, Inc. (NYSE:LXU) stock closed at $9.40 per share. One-month return of LSB Industries, Inc. (NYSE:LXU) was -8.38%, and its shares lost 43.00% of their value over the last 52 weeks. LSB Industries, Inc. (NYSE:LXU) has a market capitalization of $698.836 million.
Third Avenue Small-Cap Value Fund made the following comment about LSB Industries, Inc. (NYSE:LXU) in its Q3 2023 investor letter:
“LSB Industries, Inc. (NYSE:LXU) and the Series C shares of Atlanta Braves Holdings (BATRK) were added to the Fund in the third quarter. The investment theses are discussed below.
LSB Industries (“LXU”) is a pure-play U.S.-based nitrogen chemicals producer with three wholly owned facilities in Arkansas, Oklahoma and Alabama. The company’s products are sold primarily in agricultural and mining applications. LXU, a previous Fund holding, was purchased during the third quarter, as the valuation became attractive. Fund Management was also impressed with LXU’s improved balance sheet and multi-year advancement toward institutionalizing its operations and capacity expansions for significantly higher-margin derivative products, such as nitric acid. The owner-operator management team is aligned with shareholders, given significant insider holdings. Today, LXU has an opportunity to generate ample operating cash flow, shielded by a sizable net operating loss (“NOL”) balance. Its global low-cost producer advantage in the U.S. offers an additional margin of safety via the scarcity of its asset base. The current valuation implies around a 40% discount to our conservative estimate of replacement cost value.
The U.S.-focused Small-Cap Team (and the broader Third Avenue investment team) have repeatedly discussed “near-shoring” as a developing theme, with attractive investment opportunities likely to present themselves in the coming years. LXU is one such position determined to benefit from U.S. near-shoring for the following three reasons:..” (Click here to read the full text)
Nitrogen, Fertilizer, Agriculture
LSB Industries, Inc. (NYSE:LXU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held LSB Industries, Inc. (NYSE:LXU) at the end of second quarter which was 23 in the previous quarter.
We discussed LSB Industries, Inc. (NYSE:LXU) in another article and shared long-term returns of Jeff Smith’s activist targets. In addition, please check out our hedge fund investor letters Q3 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.
