Marty Whitman

wealthymatters.comMartin J. Whitman(Marty Whitman)is the founder of Third Avenue Funds, a family of Value Mutual Funds. Martin Whitman is a veteran value investor with a long, distinguished history . He has successfully identified value in securities for more than 50 years.

Mr. Whitman served as a Distinguished Management Fellow at Yale School of Management for over 30 years.He received a Masters degree in Economics from the New School for Social Research and graduated from Syracuse University magna cum laude. Syracuse University’s Whitman School of Management is named in his honor.

One proven value philosophy guides each of his investments:-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.So he seeks to invest in safe companies that are cheaply priced:

Key criteria he uses are as follows:-

Safe Companies

  • Strong Finances: High-quality assets with conservative and appropriate leverage
  • Competent Management: Proven track record and interests aligned with outside, passive, minority shareholders
  • Understandable Business: Comprehensible business model with meaningful financial information readily available
  • Sound Political and Regulatory Environment: Presence of a legal framework that protects a business and shareholder rights

Cheaply Priced

  • Significant Discount to Intrinsic Value: Priced substantially below a conservative estimate of the business’ value as a private entity or takeover candidate
  • Attractive Growth Prospects: Potential for attractive growth in the value of a company’s net assets over the next 5 years

He analyses companies from the bottom up, reviewing all public documents, speaking with outside experts and contacts, identifying value and risk drivers before making an investment decision.He prefers to analyse the quality and quantity of resources existing in a business, rather than its projected future revenues and earnings because he thinks 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.His stringent research gives him conviction in his best ideas, allowing him to establish concentrated positions.

Following are some interesting quotes, to remember. by Marty Whitman:

“In the final analysis, value investing means being price conscious rather than outlook conscious. You buy what is cheap and safe. Most everybody else is outlook conscious, or price unconscious.”

“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”

“We ignore outlooks and forecasts… we’re lousy at it and we admit it… everyone else is lousy too, but most people won’t admit it.”

About Keerthika Singaravel

3 Responses to Marty Whitman

  1. zap says:

    very inspiring

  2. wickedwitchofthewest says:

    I envy your ability to publish wonderful posts on Simply wanted to say I like this !

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