In journalism, the headlines you read are generally an afterthought, crafted by a headline writer – not the story’s author – to fit the available space and grab attention. For us, story titles function differently: they’re “framing devices,” which we write early and which help us figure out how to explain the entire story.

This is “the story without a title,” because I’ve got no clue about what’s going on.

On September 19^th, Third Avenue announced a series of dramatic changes which mostly undo the dramatic changes they’d made in the prior four years. In particular:

• Chip Rewey is out. Robert “Chip” Rewey, who was brought in on June 14, 2014 to help the firm get past “the cult of Marty,” is out. That’s a reference to the firm’s founder and most powerful investment manager, Marty Whitman. At the time, it struck us as somewhere between “odd” and “bad.” We wrote:

  The most prominent change was the arrival, in 2014, of Robert Rewey, the new head of the “value equity team” and formerly a portfolio manager at Cramer Rosenthal McGlynn, LLC, where his funds’ performance trailed their benchmark (CRM Mid Cap Value CRMMX, CRM All Cap Value CRMEX and CRM Large Cap Opportunity CRMGX) or exceeded it modestly (CRM Small/Mid Cap Value CRMAX). Industry professionals we talked with spoke of “a rolling coup,” the intentional marginalization of Mr. Whitman within the firm he created and the influx of outsiders.

   

  Shortly thereafter, the managers of Third Avenue Small-Cap Value departed. We noted, in Manager Changes, that:

  Curtis Jensen and Charles Page are no longer listed as portfolio managers.  The debate centers on whether to use “purge,” “cleansing” or “rolling coup” to describe the continuing departure of almost all the old guard Third Avenue managers.

   

• Tim Bui and Yang Lie are out. Both served as Mr. Rewey’s co-managers, with Mr. Bui brought in from the outside for the task.
• Victor Cunningham is in. Mr. Cunningham had co-managed Third Avenue Small Cap from 2013-2016, left and has now returned.
• Michael Fineman is in. Mr. Fineman managed a hedge fund for eight years, before leaving the firm in 2014. He’s now a co-manager of Third Avenue Value.
• Third Avenue International Value is out. The fund has struggled since the serial departures of Amit Wahdwaney and his analysts in 2014. Now saddled with a bad track record and sorely diminished assets, the fund is merging into Third Avenue Value.
• The cult of Marty is in, Marty is not. The 93-year-old remains as the firm’s chairman emeritus and is presumably the architect here, but is not going to be driving the firm’s investments.
• Third Avenue Real Estate Value (TVRVX/TAREX) remains, distant from the mess and highly functional.

Almost all of the firm’s dramatis personae are now off the stage: founder Whitman, the polarizing president David Barse, Whitman’s lead managers Amit Wadhwaney and Ian Lapey, and some (but apparently not all) of Mr. Barse’s hires. At this point, the firm seems to be banking on the viability of Mr. Whitman’s “safe and cheap” perspective and the ability of several second-tier professionals to step up.

Can they? Don’t know. Was the “cult of Marty” extinguished in the Barse years? Don’t know. Has the “cult of Barse” been extinguished now? Don’t know. Do two sets of purges, in 2014 and 2017, likely linked to two periods of miserable days at work, leave behind the foundations on which to build a healthy culture? Don’t know.  Is it possible to revive a “cult brand” in the absence of any cult leader? Don’t know.

Friends of Third Avenue seem stunned but modestly optimistic. Time will tell if they’re right. For now, I’d limit my attention to the distinctive, stable and excellent Real Estate Value team.