The Best-Performing Stocks in Martin Whitman's Portfolio

NVIDIA tops the chart with a return YTD of 58%

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Nov 23, 2015
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Martin Whitman (Trades, Portfolio) is founder and portfolio manager of the Third Avenue Value Fund (TAVFX). He manages a portfolio composed of 37 stocks in which two of them are new. The portfolio has a total value of $1,689 million.

Third Avenue Value holds 2,082,168 shares of NVIDIA Corp. (NVDA), which has returned 58.5% since the beginning of the year. The stake represents 0.39% of outstanding shares of the company and 2.46% of the fund's total assets.

The company is a visual computing company, connecting people through the powerful medium of computer graphics. During the third quarter revenue grew by 7% from a year ago or by 13% from the second quarter of 2015. GAAP operating income had a growth of 15% from the same quarter of a year before. Quarterly cash dividend grew by 18%, and the company will return $1 billion to shareholders in fiscal 2017.

The stock is trading with a P/E ratio of 29.10. In the last 12 months, the price has risen by 53% and is now 1.72% below its 52-week high and 65.73% above its 52-week low. It looks overpriced at the current price of $31.39 per share. The DCF calculator gives a fair value of $15.93, while the Peter Lynch earnings line gives the same fair value of $15.2.

GuruFocus gives NVIDIA a profitability and growth rating of 7 out of 10, with strong returns (ROE 13.73%, ROA 8.44%) that are outperforming 77% of the companies in the Global Semiconductors industry. Financial strength has a rating of 6 out of 10. The cash-to-debt ratio of 3.34 is far above the industry median of 1.62.

PRIMECAP Management (Trades, Portfolio) is the largest guru shareholder with 5.42% of outstanding shares, followed by Whitman with 0.39% and Pioneer Investments with 0.35%.

Third Avenue Value holds 1,479,930 shares of Masco Corp. (MAS), which has returned 37.9% since the beginning of the year. The stake represents 0.44% of outstanding shares of the company and 2.31% of the fund's total assets.

The company manufactures, distributes and installs home improvement and building products, with emphasis on brand-name consumer products and services holding positions in their markets. It reported a 6% increase for net sales for the third quarter.

The stock is trading with a P/E ratio of 26.70. In the last 12 months, the price has risen by 41% and is now 0.79% below its 52-week high and 34.06% above its 52-week low. It looks overpriced at the current price of $30.19. The DCF calculator gives a fair value of $17.85, while the Peter Lynch earnings line gives a higher fair value of $26.8.

GuruFocus gives Masco a profitability and growth rating of 7 out of 10, with positive returns (ROE 74.60%, ROA 5.65%) that are outperforming 66% of the companies in the Global Building Materials industry. Financial strength has a rating of 7 out of 10 and the cash-to-debt ratio of 0.37 is below the industry median of 0.45.

The company's largest shareholder among the gurus is Third Avenue Management (Trades, Portfolio) with 15.59% of outstanding shares followed by Whitman with 14.51%, Columbia Wanger (Trades, Portfolio) with 10.12% and Mario Gabelli (Trades, Portfolio) with 4.59% of outstanding shares.

The investor holds 73,999 shares of White Mountains Insurance Group Ltd. (WTM), which has returned 22.9% since the beginning of the year. The stake represents 1.3% of outstanding shares of the company and 3.09% of the fund's total assets.

The company's businesses are conducted through its insurance and reinsurance subsidiaries and affiliates. White Mountains' reportable segments are OneBeacon, Sirius Group, HG Global/BAM and Other Operations. It had a solid third quarter in which it reported a 78% combined ratio continuing its long track record of success; driven by the U.S. dollar pullback from its recent highs, investments were up 0.4%.

The stock is trading with a P/E ratio of 46.30. In the last 12 months, the price has risen by 21% and is now 4.12% below its 52-week high and 25.10% above its 52-week low. It looks overpriced at the current price of $773.1. The DCF calculator gives a fair value of $640.63, while the Peter Lynch earnings line gives the higher value of $729.1.

GuruFocus gives White Mountains a profitability and growth rating of 6 out of 10, with returns (ROE 2.53%, ROA 0.92%) that are underperforming 88% of the companies in the Global Insurance - Property & Casualty industry. Financial strength has a rating of 6 out of 10. The cash-to-debt ratio of 0.52 is far below the industry median of 2.89.

HOTCHKIS & WILEY is the largest guru shareholder with 2.97% of outstanding shares, then Third Avenue Management (Trades, Portfolio) with 1.93%.

He holds 1,291,281 shares of Cavco Industries Inc. (CVCO), which has returned 15.8% since the beginning of the year. The stake represents 14.51% of outstanding shares of the company and 5.59% of the fund's total assets.

The company designs and produces factory-built homes, distributed through a network of independent and company-owned retailers, planned community operators and residential developers. During the third-quarter results improved from an 8.1% growth in homes sold by its factory-built housing segment versus the same period last year and net revenue was up 6.2% from the third quarter of fiscal year 2014.

The stock is trading with a P/E ratio of 31.80. In the last 12 months, the price has risen by 21% and is now 13.87% below its 52-week high and 42.19% above its 52-week low. It looks overpriced at the current price of $91.77. The DCF calculator gives a fair value of $42.63 and the Peter Lynch earnings line gives almost the same fair value of $41.3.

GuruFocus gives Cavco a profitability and growth rating of 7 out of 10, with good returns (ROE 8.13%, ROA 5.13%) that are outperforming 61% of the companies in the Global Residential Construction industry. Financial strength has a rating of 8 out of 10. The cash-to-debt ratio of 1.54 is far above the industry median of 0.65.

The company's largest shareholder among the gurus is Third Avenue Management (Trades, Portfolio) with 15.59% of outstanding shares followed by Martin Whitman (Trades, Portfolio) with 14.51%, Columbia with 10.12% and Mario Gabelli (Trades, Portfolio) with 4.59% of outstanding shares.

The investor holds 2,279,413 shares of Bank of New York Mellon Corp. (BK), which has returned 9.5% since the beginning of the year. The stake represents 0.21% of outstanding shares of the company and 5.86% of the fund's total assets.

The company has been in business since 1784. It is a global investments company. Its businesses are in two principal segments, Investment Management and Investment Services. For the third quarter total revenue was up 1% on an adjusted basis and total noninterest expense decreased 3% on an adjusted basis.

The stock is trading with a P/E ratio of 18.90. In the last 12 months, the price has risen by 9% and is now 3.76% below its 52-week high and 22.76% above its 52-week low. It looks overpriced at the current price of $43.74. The DCF calculator gives a fair value of $34.22 and the Peter Lynch earnings line gives the same fair value of $36.2.

GuruFocus gives Bank of New York Mellon a profitability and growth rating of 7 out of 10, with ROE 6.84% that is outperforming 58% of the companies in the Global Semiconductors industry and ROA 0.69 that is underperforming 65% of the competitors in the same industry. Financial strength has a rating of 4 out of 10 with a cash-to-debt ratio of 5.01.

Dodge & Cox is the largest firm shareholder with 5.26% of outstanding shares, followed by the investor Chris Davis (Trades, Portfolio) with 2.34% and the firm First Eagle Investment (Trades, Portfolio) with 2.16%.

Third Avenue Value holds 81,573 shares of Alleghany Corp. (Y), which has returned 9.2% since the beginning of the year. The stake represents 0.51% of outstanding shares of the company and 2.35% of the fund's total assets.

The company is engaged, through Alleghany Insurance Holdings LLC ("AIHL") and its subsidiaries in the property and casualty and surety insurance business. It is also engaged in private capital investments in oil exploration and production, remanufacturer/retrofitter of precision machine tools and supplier of replacement parts¸ manufacturer of custom trailers and truck bodies.

The stock is trading with a P/E ratio of 15.00. In the last 12 months, the price has risen by 11% and is now 2.28% below its 52-week high and 16.34% above its 52-week low. It looks overpriced at the current price of $505.96 per share. The DCF calculator gives a fair value of $759.86, while the Peter Lynch earnings line gives a lower fair value of $544.0.

GuruFocus gives Alleghany a profitability and growth rating of 7 out of 10, with returns (ROE 7.22%, ROA 2.30%) that are underperforming 66% of the companies in the Global Insurance - Property & Casualty industry. Financial strength has a rating of 6 out of 10. The cash to debt ratio of 0.32 is far below the industry median of 2.89.

The company largest shareholder among the gurus is First Eagle Investment (Trades, Portfolio) with 3.54% of outstanding shares followed by First Pacific Advisors (Trades, Portfolio) with 1.84%, Chuck Royce (Trades, Portfolio) with 1.81% and Steven Romick (Trades, Portfolio) with 1.69% of outstanding shares.

Third Avenue Value holds 1,178,413 shares of AGCO Corp. (AGCO), which has returned 8.7% since the beginning of the year. The stake represents 1.38% of outstanding shares of the company and 3.84% of the fund's total assets.

The company manufactures and distributes of agricultural equipment and related replacement parts in various parts of the country. It sells a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, tillage, implements and grain storage and protein production systems.

The stock is trading with a P/E ratio of 15.30. In the last 12 months, the price has risen by 10% and is now 15.99% below its 52-week high and 17.04% above its 52-week low. It looks overpriced at the current price of $48.64. The DCF calculator gives a fair value of $46.91; the Peter Lynch earnings line confirms the same fair value of $47.0.

GuruFocus gives AGCO a profitability and growth rating of 7 out of 10, with strong returns (ROE 8.62%, ROA 3.78%) that are outperforming 61% of the companies in the Global Farm & Construction Equipment industry. Financial strength has a rating of 7 out of 10, but cash-to-debt ratio of 0.28 is below the industry median of 0.42.

Third Avenue Management (Trades, Portfolio) is the largest guru shareholder with 2.15% of outstanding shares, followed by First Pacific Advisors (Trades, Portfolio) with 1.38% then Whitman with 1.38% and Richard Snow (Trades, Portfolio) with 1.29% of outstanding shares.

The investor holds 1,596,400 shares of General Motors Co. (GM), which has returned 7.0% since the beginning of the year. The stake represents 0.1% of outstanding shares of the company and 2.98% of the fund's total assets.

The company designs, builds and sells cars, trucks and automobile parts. It also provides automotive financing services through General Motors Financial Company Inc. Its four automotive segments include GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO) and GM South America (GMSA).

The stock is trading with a P/E ratio of 13.30. In the last 12 months, the price has risen by 13% and is now 6.82% below its 52-week high and 47.60% above its 52-week low. It looks overpriced at the current price of $36.34. The DCF calculator gives a fair value of $40.27 and the Peter Lynch earnings line confirms the same fair value of $40.8.

GuruFocus gives General Motors a profitability and growth rating of 4 out of 10, with ROE 12.26%, that is outperforming 64% of the companies in the Global Auto Manufacturers industry and ROA 2.97% that is under performing 60% of the companies in the same industry. Financial strength has a rating of 6 out of 10. The cash-to-debt ratio of 0.41 is slightly below the industry median of 0.56.

The company's largest shareholder among the gurus is Warren Buffett (Trades, Portfolio) with 3.21% of outstanding shares followed by David Einhorn (Trades, Portfolio) with 1.05%, HOTCHKIS & WILEY with 0.97% and David Tepper (Trades, Portfolio) with 0.83% of outstanding shares.

Whitman holds 479,200 shares of PNC Financial Services Group Inc. (PNC), which has returned 6.8% since the beginning of the year. The stake represents 0.09% of outstanding shares of the company and 2.79% of the fund's total assets.

The company is a diversified financial services company in the United States and is engaged in retail banking, corporate and institutional banking, asset management and residential mortgage banking, providing products and services nationally, as well as other products and services in its markets.

The stock is trading with a P/E ratio of 12.90. In the last 12 months, the price has risen by 8% and is now 5.11% below its 52-week high and 16.54% above its 52-week low. It looks overpriced at the current price of $95.38. The DCF calculator gives a fair value of $76.18 while the Peter Lynch earnings line gives a higher value of $110.7.

GuruFocus gives PNC Financial a profitability and growth rating of 5 out of 10, with good returns (ROE 8.75%, ROA 1.18%) that are outperforming 54% of the companies in the Global Banks - Regional - U.S. industry. Financial strength has a rating of 4 out of 10. The cash to debt ratio of 0.70 is below the industry median of 1.73.

James Barrow (Trades, Portfolio) is the largest guru shareholder with 3.77% of outstanding shares, followed by Brian Rogers (Trades, Portfolio) with 0.72% Richard Pzena (Trades, Portfolio) with 0.56% and Diamond Hill Capital (Trades, Portfolio) with 0.44% of outstanding shares.

Third Avenue Value holds 1,988,349 shares of Comerica Inc. (CMA), which has returned 0.4% since the beginning of the year. The stake represents 1.13% of outstanding shares of the company and 5.58% of the fund's total assets.

The company is a financial services company which operates in three business segments: the Business Bank, the Retail Bank, and Wealth Management. The Business Bank is mainly comprised of the several businesses that include middle market, commercial real estate, national dealer services, international finance, leasing, financial services and technology and life sciences.

The stock is trading with a P/E ratio of 15.40. In the last 12 months, the price has dropped by 5% and is now 13.17% below its 52-week high and 17.43% above its 52-week low. It looks overpriced at the current price of $46.41 per share. The DCF calculator gives a fair value of $44.55, and the Peter Lynch earnings line confirms the same fair value of $45.9.

GuruFocus gives Comerica a profitability and growth rating of 5 out of 10, with strong returns (ROE 7.31%, ROA 0.80%) that are underperforming 57% of the companies in the Global Banks - Regional - U.S. industry. Financial strength has a rating of 6 out of 10. The cash-to-debt ratio of 2.24 is far above the industry median of 1.73.

The company's largest shareholder among the gurus is Third Avenue Management (Trades, Portfolio) with 1.47% of outstanding shares followed by Whitman with 1.13%, Richard Pzena (Trades, Portfolio) with 1.03% and Jim Simons (Trades, Portfolio) with 0.53% of outstanding shares.