home : philosophy
Third Avenue Management adheres to a disciplined, fundamental value approach to investing. Our team of investment professionals utilizes a time-tested investment process to analyze companies from the bottom-up with a focus on balance sheet analysis. We seek absolute returns for our clients over the long term, while minimizing investment risk.
Third Avenue focuses on the associated risks and costs of each investment decision. We believe the cheaper you buy, the greater the potential investment reward and the cheaper you buy, the less the inherent risk. The low price paid limits downside market risk and increases appreciation potential. Our analytical approach concentrates on "what is" in terms of understanding a business, in contrast to "what the market thinks." At Third Avenue, stock market prices do not determine business value. This means we take market risk, but limit investment risk. Investment risk is limited by seeking companies with very strong financial positions whose securities are priced at significant discounts to private market value.
One proven value philosophy guides each of our investments. We seek to invest in
financially sound companies that are cheaply priced:
Key criteria are as follows:
We analyze companies from the bottom up, reviewing all public documents, speaking with outside experts and contacts, identifying value and risk drivers and interviewing management before making an investment decision.
We analyze the quality and quantity of resources existing in a business, rather than its projected future revenues and earnings. We think that the current balance sheet is the best, albeit not the only, measure of a company's value. Predictions based on future operating earnings do not capture the possible impact of corporate events such as mergers and acquisitions, changes of control, management buyouts, share repurchases, refinancings, reorganizations, asset sales, spin-offs, investments in new ventures and corporate liquidations.
Our stringent research gives us conviction in our best ideas, allowing us to establish concentrated positions.
We invest only in companies that we believe have the potential to create value for our clients over the long term, withstanding cyclical downturns and evolving as leaders among their competition. Our long-term focus minimizes portfolio turnover and enhances the tax efficiency of our funds and private portfolios.