home : process
Each new portfolio is individually constructed utilizing a risk reward profile to
identify our best ideas at the time of investment. Portfolio construction decisions
are the responsibility of the portfolio manager. We employ a multi-step buying process,
which includes the following phases:
- The first phase of the process entails establishing initial positions in core holdings.
The number of positions we purchase in this phase depends on security prices of
our core holdings.
- The second phase consists of building the positions that remain in our price range.
If securities that we initially purchase run up, we will likely not buy additional
shares until pricing is more favorable. During this phase, we also establish additional
positions by selecting from the securities on our core list that are selling at
prices we consider reasonable.
- The final step of the buying process is establishing full positions in each of the
portfolio's holdings, often by averaging down in existing positions. At each step,
while we are extremely price conscious we do not try to time the market. Depending
on market conditions, a typical portfolio could require up to six months or more
to get fully invested.
Third Avenue Management manages relatively concentrated portfolios, as we believe
that diversification is a poor surrogate for knowledge, price consciousness and
control. A typical portfolio will contain between 20 and 40 holdings. No attempt
is made to mirror a benchmark, either by composition or weighting.