is the chairman and portfolio manager of asset management firm
Third Avenue Management
, which he founded in 1986. Whitman employs a disciplined value
approach, stating in his third-quarter letter: "The Third Avenue
belief is that underlying values, and growth in underlying
values, will eventually be recognized in OPMI [Outside Passive
Minority Investor] market prices, especially if potential
catalysts such as changes in control, or going private, exist."
In Whitman's third quarter - the three months ended July 31, 2012
- he made two new domestic buys: Stanley Furniture Co. (
) and Symantec Corporation (
Stanley Furniture Co. (
Whitman bought 92,333 shares of Stanley Furniture at an average
price of $4.12 in the third quarter.
Stanley Furniture Company is a designer and manufacturer of
residential wood furniture exclusively targeted at the
upper-medium price range. Stanley Furniture Co. has a market cap
of $70.9 million; its shares were traded at around $4.95 with and
P/S ratio of 0.7.
Over the last five years, Stanley Furniture's stock has declined
almost 79%, but it has rallied recently, increasing almost 71% in
the last year, including a 50% run up in March. That month, the
Census Bureau reported that furniture sales increased 8.3% in
April from a year earlier. A few months earlier, in January, the
largest increase since July 2000 occurred. Existing single-family
homes also sold at an annual rate of 4.1 million in January, the
highest rate in roughly two years, according to the National
Association of Realtors, further boosting investor confidence.
Although profitable before 2009, Stanley has reported losses for
its last three fiscal years. In its most recent second quarter,
ended June 30, 2012, Stanley reported net income of $36.9
million, increased from a $1.56 million loss the previous quarter
and a $0.60 loss the previous year. Revenue was $24.4 million, a
decline from $26.8 million the previous quarter and $27.4 million
the previous year.
The company had $47.4 million in cash on its balance sheet at
quarter-end, up from $17.3 million at Dec. 31, 2011, helped by
CDSOA proceeds of $39.9 million from funds that were previous
Symantec Corp. (
Whitman bought 1,550,000 shares of Symantec at an average price
of $15 in the third quarter.
Symantec, a world leader in Internet security technology,
provides a broad range of content security solutions to
individuals and companies. Symantec has a market cap of $12.62
billion; its shares were traded at around $17.78 with a P/E ratio
of 12.8 and P/S ratio of 1.9. Symantec had an annual average
earnings growth of 13.2% over the past 10 years. GuruFocus rated
the business predictability rank of 4-star
"We initiated a position in the common stock of Symantec Corp. (
), a leading provider of security, backup / recovery and storage
management software. The company's products are sold to both
consumers (through its Norton product line) and corporations.
Symantec's end markets seem to be generally healthy and growing,
and the software business is very attractive owing to recurring
maintenance revenue, high margins (gross margins in excess of
80%) and robust cash flow generation. Symantec has a very strong
financial position with $4.1 billion of cash and investments,
compared to total debt of $3.0 billion. During the quarter, the
company issued $1 billion of long-term debt at very attractive
rates (2.75% and 3.9% for five and ten year maturities,
respectively)," Third Avenue Management commented in its
third-quarter letter. Continue reading its comments on Symantec
Whitman's also added to 11 of his existing positions. His
greatest new adds were: Devon Energy Corp. (
) and Alleghany Corp. (
Devon Energy Corp. (
Whitman increased his position in Devon Energy by 119.19%, or
607,195 shares, at an average price of $59 each. He initiated the
position with 519,149 shares at a cost of $63 each on average. As
of the end of his third quarter, he owns 1,125,344 shares total.
Devon Energy is an independent energy company engaged primarily
in oil and gas exploration, development and production, and in
the acquisition of producing properties. Devon Energy has a
market cap of $24.47 billion; its shares were traded around $60.8
with a P/E ratio of 12.9 and P/S ratio of 2.1. The dividend yield
of Devon Energy stocks is 1.3%.
"Devon's common stock price has been falling recently, owing
primarily to weakness in commodity prices. In Devon's recently
reported second quarter, oil, natural gas and natural gas liquids
prices fell 19%, 54% and 26%, respectively, compared to a year
ago," Third Avenue Management commented in its third quarter
letter. Read the complete comments on Devon here.
Alleghany Corp. (
Whitman increased his position in Alleghany Corp. by 70.68%, or
28,201 shares, in the third quarter at an average price of $335
each. He initiated the position in the second quarter, buying
39,898 shares at an average price of $333 each. At the end of his
third quarter, he owned 68,099 shares total.
Alleghany Corp. is engaged, through its subsidiaries Chicago
Title and Trust Company, Chicago Title Insurance Company,
Security Union Title Insurance Company and Ticor Title Insurance
Company and their subsidiaries, in the sale and underwriting of
title insurance and in other real estate-related services
businesses, and through CT&T's subsidiary, Alleghany Asset
Alleghany Corporation has a market cap of $5.84 billion; its
shares were traded around $344.98 with a P/E ratio of 19.8 and
P/S ratio of 6. Alleghany Corporation had an annual average
earnings growth of 2.1% over the past 10 years.
"Future book value growth should be partially driven by the
company's 2012 purchase of Transatlantic, a leading global
reinsurer. This transaction appears to have been well timed, as
it was completed at a significant discount to tangible book value
and reinsurance rates are improving in 2012," Third Avenue
Management commented on Alleghany in its second quarter letter.
Read the comments here.
See Martin Whitman's other third-quarter buys and sells in his
portfolio here. Also check out the Undervalued Stocks, Top Growth
Companies and High Yield stocks of Martin Whitman.About
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