Many investors have different opinions about what the term “value investing” actually entails, but one firm has demonstrated that its brand of value investing works over the long run. With a five-year annualized return of 17.08% as of Feb. 28, 2025, Third Avenue’s Value Fund describes its process as “buy[ing] grey clouds and sell[ing] sunshine.”
In a recent interview with Hedge Fund Alpha, Matthew Fine of Third Avenue shared more about the firm’s strategy and some important lessons from his early years as an investor.
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Background on Matthew Fine and Third Avenue
Fine serves as the portfolio manager of the Third Avenue Value Fund and related strategies, including separately managed accounts, the Third Avenue Global Value UCITS and Third Avenue’s international strategy. He is also a co-portfolio manager of Third Avenue’s small-cap strategy, a principal of the firm, and a member of the firm’s management committee.
Third Avenue Management continues to employ the approach developed by founder and legendary value investor Marty Whitman. The strategy involves identifying investment opportunities where they can purchase a business for what they believe is a sizable discount to their conservative estimate of its worth.
“When we think about the value of a business in a very fundamental way, we think about what we would pay to purchase 100% of the business with our own money and without any type of exit for the foreseeable future,” Fine explained. “In other words, at what purchase price would the actual economics of the business generate an attractive investment return. It has nothing to do with making predictions about where the stock might trade in the future.”
As of the end of 2024, Third Avenue Management had about $1.4 billion in assets under management, including about $850 million in the Global Value Strategy.
Carrying on Whitman’s legacy at Third Avenue Management
Fine feels honored to have worked alongside Marty Whitman for almost 20 years until he passed away in 2018. He continues to “carry the torch” for Whitman’s investment philosophy, which has been practiced at Third Avenue since 1986.
