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A Value Legend Is Buying Up Asia

By Stansberry Research Interview Series
Wednesday, October 10, 2007

If you're a serious investor, you need to know who Marty Whitman is.
 
Whitman is the founder of Third Avenue Funds, a New York investment firm. Whitman manages Third Avenue's Value Fund (TAVFX). Since its inception in 1990, he's shown investors returns of 1,263%, or average annual returns of 16.7% for 17 years. He's beaten the S&P 500 by an average of 4% a year since inception.
 
Whitman's returns are dwarfed only by his openness and pro-shareholder attitudes as a manager. He writes quarterly, not annual, shareholder letters that are chock-full of investment advice.
 
You could get a better understanding of investing through these than most major MBA programs in the U.S. Click here to read them.
 
Part of Whitman's attitude is explained by the fact that he has a big chunk of his own money in his company's funds. Few things align your investment manager's interests with your own like him putting $63 million worth of his own money beside yours. Especially when you compare this to most fund managers, whose personal assets and fund assets barely share a nodding acquaintance. I encourage you to check up on this with any mutual funds you're holding now.
 
Today, the Third Avenue Value Fund has more than $11 billion in assets under management. Yet this massive size isn't hurting Whitman's ability to generate returns. In the last year, he's up 17%. Most managers find their performances stagnate as soon as assets under management rise above a couple billion. How can Whitman produce these returns with $11 billion?
 
By putting his money outside the U.S.
 
Marty Whitman currently has 54% of his equity position abroad. The breakdown is as follows: 53% in Hong Kong; 29% in Japan; 10% in South Korea; and 8% in Western Europe.
 
Only one of his top five holdings is a U.S. play.
 
Company
Business
% of Assets
Cheung Kong Holdings
Hong Kong Developer
7.16%
Henderson Land
Hong Kong Developer
7.11%
Toyota
Automobiles
5.51%
Posco
Steel Producer
4.64%
Forest City Enterprises
U.S. Developer
3.51%
 
Obviously Whitman favors development companies, particularly those located in Asia. Whitman's favorite Hong Kong company of all is Cheung Kong Holdings (CHEUY.PK), one of the largest property developers in Hong Kong. Whitman has more than $500 million worth of his fund's assets in the stock.
 
You could do well to look into any of Whitman's top 10 holdings. To see them all, click here.
 
Or you could let Whitman do the picking for you. Either way, you're moving your money out of the U.S. and into other markets. If you're looking for a safe way to invest in Asia, you couldn't do better than Third Avenue's Value Fund (TAVFX). I recommended it to Inside Strategist readers back in August 2004. We're up 71%.
 
Good trading,
 
Graham




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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
Change
52-Wk
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%