Third Avenue Management’s unique value investing philosophy was developed by our late founder, Martin J. Whitman, a veritable legend of deep-value investing. Having spent much of his career as a renowned restructuring and bankruptcy expert, Marty developed an acute appreciation for the importance of balance sheet analysis as it relates to both corporate creditworthiness and corporate asset value.

As a frequent control investor, Marty also held a deep appreciation for the myriad ways that corporate owners or managers come to create shareholder value by means separate from the value created by recurring business operations, events he termed resource conversions. Over time, Third Avenue’s opportunistic distressed and restructuring approach was adapted to long-term equity investing and expanded geographically, while continuing to employ the mentality of an owner of the business, rather than a trader of the stock.

Today, Third Avenue pursues this philosophy in an unconstrained investment approach across market capitalizations, geographies, and capital structures. The Firm’s five core investment strategies in Global Value, Small-Cap Value, Real Estate Value, International Real Estate Value, and International Value each construct concentrated portfolios of high-conviction investments within their respective investment universes.

‍Furthermore, all of Third Avenue’s investment activities continue to be guided by the Firm’s enduring principles, including:

• Opportunistic, bottom-up, value investing strategies are capable of producing long-term outperformance, relative to broad market indices, even while such value strategies are not designed to produce consistent outperformance in all periods of time.
• In the effort to produce long-term outperformance, one should seek to purchase substantially undervalued securities as defined by a significant discount to a conservative estimate of readily ascertainable net asset value (“NAV”).
• Investment decisions should emphasize price as it relates to three factors inherent in a company: quality of resources, quantity of resources and long-term wealth creation potential.
• Unlike reported earnings, long-term wealth creation tends to be derived from three primary sources including cash flows available to security holders, resource conversions, or super-attractive access to the capital markets.
• Security price volatility is not synonymous with investment risk, nor is there a necessary trade-off between investment risk and potential investment returns. Instead the lower the price one pays for an investment, the higher the potential returns and the lower the investment risk.
• A determination to underpay frequently compels one to invest in industries, geographies or companies where the near-term outlook is generally perceived to be poor–requiring a corporate culture and client base supportive of this contrarian approach.
• In the pursuit of opportunities in countries, industries or companies for which the near-term outlook is challenging, it is critical to place a heavy emphasis on a company’s financial wherewithal.
• Benchmarks should have no bearing on investment activity, and high active share¹ is a natural outcome of a differentiated investment approach. In fact, we believe contrarian, special situation, or otherwise unconventional investments are often the path to superior long-term results.