Third Avenue Value Fund Letter

I just read through the third quarter shareholder letter from Marty Whitman at the Third Avenue Value Fund. Some tidbits from the letter:

1) The fund was hit with $500 million in redemptions in the quarter, and had to sell "non-core" positions. Cash in the fund is now at $719 million or 8.5% of assets.

2) During the quarter Whitman bought $1.5 million of the fund, bringing the total that he controls through his wife and others to 1.5 million shares. At the August 11 net asset value of $49.56, his stake is worth approximately $75 million, so he certainly has skin in the game. One of his senior analysts bought $200,000 of the fund also.

3) New position in Sycamore (SCMR) of 10 million shares. Increased position in ABK and MBI.

4) Eliminated the fund's position in White Mountains Insurance (WTM). He explained in the letter - "None of the securities sales during the quarter were made for investment reasons; they were all made for portfolio reasons, so that the Fund could maintain an adequate cash cushion."

He defended his position in MBIA Insurance:

"it is theoretically possible that claims experienced over the next few years could be so bad that there would be little or no value for the common stocks of monoline insurers and mortgage insurers. To date, there is no credible evidence that this might be the case. A wipe-out of the equity seems remote."

Third Quarter Letter