The Third Avenue Value Fund (Trades, Portfolio), the fund founded by the late Martin Whitman, revealed in a portfolio update filing that its top five trades during the quarter ended Jan. 31 included reductions to its holdings in Bank of Ireland Group (LSE:BIRG, Financial) and Tidewater Inc. (TDW, Financial), and boosts to its holdings in Hawaiian Holdings Inc. (HA, Financial), CK Hutchinson Holdings (HKSE:00001, Financial) and Ultrapar Participacoes SA (BSP:UGPA3, Financial).
Managed by Matthew Fine, the fund aims to build a differentiated portfolio of contrarian and special situation opportunities by investing across a global universe of sectors, geographies and security types. Third Value looks for companies that have a strong financial position and have valuations that are supported by tangible assets and market prices substantially below the fund’s estimate of intrinsic business value.
As of January 2023, the fund’s $726 million equity portfolio contains 32 stocks with a quarterly turnover ratio of 4%. The top four sectors in terms of weight are basic materials, financial services, industrials and energy, representing 22.70%, 20.92%, 20.63% and 16.77% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Bank of Ireland
The fund sold 1,627,604 shares of Bank of Ireland (LSE:BIRG, Financial), slicing 30.02% of the position and 2.07% of its equity portfolio.
Shares of Bank of Ireland averaged 8.33 euros ($9.02) during the fourth quarter; the stock is significantly overvalued based on its price-to-GF Value ratio of 1.49 as of Wednesday.
The Irish bank has a GF Score of 55 out of 100 based on a momentum rank of 6 out of 10, a profitability rank of 4 out of 10, a GF Value rank of 1 out of 10 and a rank of 3 out of 10 for financial strength and growth.
Bank of Ireland’s low financial strength is driven by several warning signs, which include equity-to-asset and debt-to-equity ratios that underperform more than 58% of global competitors despite the cash-to-debt ratio outperforming approximately 68% of global banks.
Tidewater
The fund sold 153,822 shares of Tidewater (TDW, Financial), trimming 11.38% of the position and 0.92% of its equity portfolio.
Shares of Tidewater averaged $34.56 during the fourth quarter; the stock is significantly overvalued based on its price-to-GF Value ratio of 2.65 as of Wednesday.
The Houston-based offshore vessel and marine support company has a GF Score of 52 out of 100 based on a financial strength rank of 7 out of 10, a growth rank of 2 out of 10, a GF Value rank of 1 out of 10 and a rank of 3 out of 10 for momentum and profitability.
Tidewater’s good financial strength rank is driven by the equity-to-asset and debt-to-equity ratios outperforming more than 70% of global competitors.
Despite having good financial strength, the company’s profitability ranks just 3 out of 10 on the back of profit margins and returns underperforming over 60% of global oil and gas companies.
Hawaiian Holdings
The fund purchased 623,419 shares of Hawaiian Holdings (HA, Financial), expanding the position by 110.58% and its equity portfolio by 1.06%. Shares averaged $12.69 during the fourth quarter.
GuruFocus’ GF Value Line labeled the Honolulu-based travel company a possible value trap based on the company’s low price-to-GF Value ratio of 0.32 as of Wednesday and poor ranks for financial strength and momentum.
Hawaiian Holdings’ financial strength ranks 4 out of 10 on several warning signs, which include a low Altman Z-score of 0.75 and a debt-to-equity ratio that is above 4 and underperforms more than 97% of global competitors.
The company has a GF Score of 64 out of 100 based on a profitability rank of 6 out of 10, a growth rank of 2 out of 10 and a rank of 4 out of 10 for momentum, GF Value and financial strength.
CK Hutchinson Holdings
The fund added 744,253 shares of CK Hutchinson Holdings (HKSE:00001, Financial), boosting the position by 21.72% and its equity portfolio by 0.65%. Shares averaged 45.44 Hong Kong dollars ($5.79) during the fourth quarter.
GuruFocus’ GF Value Line labeled the Hong Kong-based ports and retail conglomerate a possible value trap based on its low price-to-GF Value ratio of 0.63 as of Wednesday and low financial strength rank of 4 out of 10.
The company’s low financial strength is driven by several warning signs, which include a weak Altman Z-score of 0.62 and an interest coverage ratio that is less than five and underperforms approximately 67% of global competitors.
Despite having poor financial strength, CK Hutchinson Holdings has a GF Score of 81 out of 100 based on a GF Value rank of 9 out of 10, a growth rank of 6 out of 10 and a rank of 7 out of 10 for momentum and profitability.
Ultrapar Participacoes
The fund added 1,187,988 shares of Ultrapar Participacoes (BSP:UGPA3, Financial), boosting the position by 19.97% and its equity portfolio by 0.43%.
Shares of Ultrapar Participacoes averaged 12.99 reals ($2.53) during the fourth quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.66 as of Wednesday.
The Brazilian industrial energy company has a GF Score of 83 out of 100 based on a rank of 10 out of 10 for momentum and GF Value, a growth rank of 5 out of 10 and a rank of 7 out of 10 for financial strength and profitability.
