VALUE STRATEGY UPDATE & OUTLOOK – DECEMBER 2021
Please see the video below for an update on the Third Avenue Global Value Strategy. Key topics addressed by the Portfolio Manager, Matthew Fine, include:
- What is the state of value investing today and what may follow?
- Global supply shortages have roiled a variety of industries. How might the shortages evolve?
- What role might resource conversions play in driving future performance?
Full Length Video
Value Strategy Update & Outlook
Video Highlights
Matt Fine reviews recent performance for Third Avenue Value Fund (TAVFX):
- Discussion of U.S. growth stock dominance
- Strong absolute returns for TAVFX and impact of long-term compounding
Matt Fine discusses the state of Value Investing today:
- Historic valuation divergence between cheap and expensive companies
- Historic valuation divergence between small-cap and large-cap companies
Matt Fine discusses lumber shortages and Interfor Corp:
- Analysis of Interfor operating results during recent lumber shortages
- How being a beneficiary of a supply shortage has transformed Interfor
Matt Fine discusses supply constraints in the auto industry and portfolio holding BMW:
- Chip shortage dampening BMW auto deliveries amidst exceptional demand
- Positive price impact is outweighing negative impact of reduced volumes
Matt Fine discusses supply/demand dynamics in the copper industry:
- Copper supply shortages evolving from small to large
- Global copper inventories reach decade lows with few solutions available
- Renewable energy revolution could significantly accelerate copper demand growth
Matt Fine explains Third Avenue’s approach to Resource Conversions:
- Thinking like a business owner, rather than a stock trader
- How merger and acquisition activity, recapitalizations, realization of latent or hidden assets can build incremental shareholder value beyond operating results
Matt Fine identifies examples of Resource Conversion activity within various portfolio holdings:
- Transformative transactions at Bank of Ireland, Interfor Corp, Capstone Mining and Daimler AG
Matt Fine responds to a participant’s question on whether his research process emphasizes the potential for capital returns to shareholders when identifying new investment opportunities:
- Third Avenue takes a total return approach with a focus on capital appreciation
- Financial wherewithal and absence of liabilities can often set the stage for unencumbered cash flows and shareholder capital returns
Matt Fine responds to a participant’s question on how the portfolio in aggregate is valued today versus its historical average:
- Portfolio is statistically cheap on a historical basis
- Recent years have been an unusually accommodating period for opportunistic value investors to build an attractive portfolio
FUND RISKS: Risks that could negatively impact returns include: fluctuations in currencies versus the US dollar, political/social/economic instability in foreign countries where the Fund invests, lack of diversification, and adverse general market conditions. For a full disclosure of principal investment risks, please refer to the Fund’s Prospectus.
These materials do not constitute an offer to sell or a solicitation of an offer to purchase any securities. Third Avenue Funds are offered by prospectus only. Please click here to access and carefully read the Fund’s prospectus before investing as it contains important information, including full disclosures of investment objectives, advisory fees and expenses, and investment risks, including principal loss risk.
Distributor of Third Avenue Funds: Foreside Fund Services, LLC.
Top 10 holdings and standardized performance click here.
Definition: Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.
Definition: Basis points (BPS) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument.
Definition: Return of capital occurs when an investor receives a portion of their original investment that is not considered income or capital gains from the investment.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. For the most recent month-end performance, please call 800-443-1021.