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Ok. Let's talk a little about Third Avenue Value Fund -- TAVFX

dryflower
in Fund Discussions
What is going on at Third Avenue Value Fund does not inspire confidence. The old manager, Ian Lapey, is out with still no explanation or information. The new manager's start date I believe, was June 10th. Not much to go on. (Why does Jang Sung-taek keep coming to mind?)

The new manager, Chip Rewey, is new to Third Avenue. Who knows? One can only surmise, guess and assume.

My guess is simply that Ian Lapey got fired because Marty Whitman was disappointed in him or his performance, for some unknown reason or reasons. If Marty still makes these decisions, that is. Do we know?

I certainly have no criticism for anyone who decides to cut and run right now.

This is how I am handling it, and why.....

TAVFX is now on the shortest of short leashes. Currently, its YTD gain of 7.82% puts it in the 17th percentile in M*'s World Stock category, and it is in the 72nd percentile for the past 12 months. If and when the YTD percentile number becomes 51% or greater, I sell. On January 1, 2015 I switch to the 12 month percentile number.

That's the what. Here's my "why".

1. Inaction is always to be preferred over action, so it's time to just calm down and wait a little.

2. I have had this fund for many years, enjoy reading Marty's letters, and believe it offers a unique strategy that adds both safety and diversification (recent 70% peak to trough decline duly noted)

3. I learned from Janus Contrarian (JSVAX) that sometimes sudden management changes can lead to great results. The old manager the left for a bigger better deal I guess. It was disgusting at the time, but since the new manager started he has been absolutely kicking butt and taking names.

4. I asked rhetorically on M* board a while back "If I hold TAVFX until its 15-year percentile rank is below average, do you reckon I'll ever sell it?". Of course I don't know the answer to that question, and neither does anyone else. I hate to sell a fund that might end up being exactly what I am looking for in a fund -- above average over the long term.

Comments

  • David_Snowball
    For what interest it holds, you might glance at my "notes off the record" post which sort of touches on the subject.

    David
  • VintageFreakVintageFreak
    I never bought into TAVFX - forgive me for saying this - because their fund literature FOREVER carried picture of OLD Whitman. Talk about bad marketing.

    Manager succession is more important than most people think. Especially for boutique funds where fund is known from the manager.
  • AndyJ
    TAVFX was an outstanding U.S. small value fund coming out of the tech crash. But after MW shifted the focus, it lost its edge, IMHO. I owned it for several years, sold in early 2007, never considered it again. The heavy, heavy losses during the crisis were a real sting for a company that preached 'safe and cheap' at every opportunity.
  • MarkM
    Spoke to them on several occasions. Last time was in 2005. They were absurdly overweight the FIRE sector and preaching that as "safe and cheap". It wasn't.

    Marty was brilliant. I read his book. As one commenter said, "lost their way".
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