Martin Whitman

Third Avenue Funds

Bio From Third Avenue Funds

Martin J. Whitman, Founder and Portfolio Manager at Third Avenue Funds, a family of Value Mutual Funds. Martin Whitman is a veteran value investor with a long, distinguished history as a control investor. He has successfully identified value in securities for more than 50 years.

Mr. Whitman founded the predecessor firms to Third Avenue Funds in 1986 and M.J. Whitman LLC, a full-service broker-dealer affiliated with Third Avenue Management, in 1974. He co-manages the flagship Third Avenue Value Fund, which he has managed since its inception in 1990, and the Third Avenue Value Fund (UCITS).

Mr. Whitman served as a Distinguished Management Fellow at Yale School of Management for over 30 years.He received a Masters degree in Economics from the New School for Social Research and graduated from Syracuse University magna cum laude. Syracuse University’s Whitman School of Management is named in his honor.

Mr. Whitman is an honorary member of the Board of Trustees of Syracuse University. He also serves on the Board of the Institute for National Security Studies, an external institute of Tel Aviv University.

Whitman’s wife, Lois Whitman, is the founder and director of the Children’s Rights Division at the international rights monitoring organization Human Rights Watch. A social worker and attorney by training, she has led the division since 1994.

Philosophy(From Third Avenue Funds Website)

Third Avenue Management adheres to a disciplined, fundamental value approach to investing. Our team of investment professionals utilizes an opportunistic investment process to analyze companies from the bottom-up with a focus on balance sheet analysis. We seek absolute returns for our clients over the long term, while minimizing investment risk.

TAM focuses on the associated risks and costs of each investment decision. We believe the cheaper you buy, the greater the potential investment reward and the cheaper you buy, the less the inherent risk. The low price paid limits downside market risk and increases appreciation potential. Our analytical approach concentrates on “what is” in terms of understanding a business, in contrast to “what the market thinks.” At TAM, stock market prices do not determine business value. This means we take market risk, but limit investment risk. Investment risk is limited by seeking companies with very strong financial positions whose securities are priced at significant discounts to private market value.

What We Look For

One proven value philosophy guides each of our investments. We seek to invest in safe companies that are cheaply priced:

Key criteria are as follows:

Safe Companies

Strong Finances: High-quality assets with conservative and appropriate leverage
Competent Management: Proven track record and interests aligned with outside, passive, minority shareholders
Understandable Business: Comprehensible business model with meaningful financial information readily available
Sound Political and Regulatory Environment: Presence of a legal framework that protects a business and shareholder rights

Cheaply Priced

Significant Discount to Intrinsic Value: Priced substantially below a conservative estimate of the business’ value as a private entity or takeover candidate
Attractive Growth Prospects: Potential for attractive growth in the value of a company’s net assets over the next 5 years

We analyze companies from the bottom up, reviewing all public documents, speaking with outside experts and contacts, identifying value and risk drivers and interviewing management before making an investment decision.

We analyze the quality and quantity of resources existing in a business, rather than its projected future revenues and earnings. We think that the current balance sheet is the best, albeit not the only, measure of a company’s value. Predictions based on future operating earnings do not capture the possible impact of corporate events such as mergers and acquisitions, changes of control, management buyouts, share repurchases, refinancings, reorganizations, asset sales, spin-offs, investments in new ventures and corporate liquidations.

Our stringent research gives us conviction in our best ideas, allowing us to establish concentrated positions.

We invest only in companies that we believe have the potential to create value for our clients over the long term, withstanding cyclical downturns and evolving as leaders among their competition. Our long-term focus minimizes portfolio turnover and enhances the tax efficiency of our funds and private portfolios.

Information From GuruFocus

Martin Whitman is Founder and Portfolio Manager of the Third Avenue Value Fund (TAVFX). From inception in November 1990 through October 2007, his fund has returned an annualized average of 16.83%. In the same period, the S&P 500 index returned an average 12.33% annually.

Performance of Third Avenue Value Fund

Year	Return (%)	S&P500 (%)	Excess Gain (%)
2008	-45.6	-37	-8.6
2007	5.75	5.61	0.1
2006	14.7	15.79	-1.1
2005	16.5	4.91	11.6
2004	26.6	12	14.6
2003	37.08	28.7	8.4
2002	-15.19	-22.1	6.9
2001	2.82	-11.9	14.7
2000	20.76	-9.1	29.9

Martin Whitman Current Portfolio and Current Stock Pics

Quotes by Martin Whitman

“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”

“We attracted a lot of market timers and asset allocators. I don’t need those … amateurs in my fund.”

“In the financial world it tends to be misleading to state, “There is no free lunch.” Rather the more meaningful comment is, “Somebody has to pay for lunch.”"

Earnings are vastly overrated. Look at the title of my new book, Value Investing: A Balanced Approach (John Wiley & Sons). No smart businessman treats one accounting number as more important than another. They are all part of the whole. The goal of any business person is to create wealth, and except on Wall Street, profits are viewed as the least desirable way to create wealth because of the income-tax disadvantage. It’s a lot easier to look at the quantity and quality of resources a company has than to forecast its earnings. If you have good management, it will convert those resources into something of value.”

I think it’s easier than trying to play the market and forecast the market’s gyrations. Most investors are outlook-conscious. I’m price-conscious. I have this easy way of measuring price, quantity and quality. Everything is in the balance sheet–the only way you know whether you’ve covered all the bases is to look at the balance sheet.”

Shareholder Letters

http://www.thirdavenuefunds.com/ta/documents/sl/shareholderletters-09Q4.pdf#TAVFX

http://www.thirdavenuefunds.com/ta/documents/sl/shareholderletters-09Q3.pdf#TAVFX

http://www.thirdavenuefunds.com/ta/documents/sl/shareholderletters-09Q2.pdf#TAVFX

http://www.thirdavenuefunds.com/ta/documents/sl/shareholderletters-09Q1.pdf#TAVFX

http://www.thirdavenuefunds.com/ta/documents/sl/shareholderletters-08Q4.pdf#TAVFX

For More Fund Letters visit Thirdavenuefunds.com

Articles about Martin J Whitman

2010

Whitman to step down as Third Avenue investment chief-WSJ

Infromation On Third Avenue Fund’s New Fund: Third Avenue Focused Credit Fund TFCVX

2009