RDN: Now that he has reentered and buying 10 percent of the company, and I can get in for a price less than he paid, of course I'm going to be willing to look at it again too.
Whitman has dramatically increased his position:
Investor Reports 18.8 Pct Radian Stake
Tuesday November 13, 6:46 pm ET
Radian Group Shares Surge After Third Avenue Management Reports 18.8 Percent Stake
NEW YORK (AP) -- Radian Group Inc. shares surged Tuesday after investment adviser Third Avenue Management LLC reported taking a 18.8 percent stake in the credit-risk management and mortgage insurance firm.
Radian Group shares jumped $1.71, or 15.3 percent, to $12.86 Tuesday. During the past 52 weeks, the company's stock has dropped from a high of $67.35 in January to a low of $8.15 earlier this month.
Radian shares have been trading at their lowest levels in 10 years, as tightening credit markets, writedowns and losses related to a subprime mortgage joint venture have hammered the company.
In a Securities and Exchange Commission filing Tuesday, Third Avenue reported owning 15.1 million shares of the Philadelphia-based company.
Third Avenue reported its stake in a Schedule 13G filing, which indicates the investment adviser does not intend to change or influence control of the company.
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Fortune Mag:
October 23 2007: 8:03 AM EDT
(Fortune Magazine) -- "We are cowards." That's how Marty Whitman, the octogenarian dean of deep-value investors, describes himself and his colleagues at the firm he founded, Third Avenue Management.
Why? Simple, Whitman explains: "We hate to lose money."
Marty Whitman has nerve and patience.
Driven by that fear, Whitman and his crew focus on finding stocks that are "safe and cheap." Sit down and talk to him about his investing philosophy - as Fortune did recently at the firm's midtown Manhattan headquarters - and those two words come up regularly. And always in that order: safe, then cheap.
Safe, to Whitman, means companies with rock-solid financials and managers whose interests are aligned with those of their stakeholders. Rather than focus on near-term earnings projections, which aren't always a reliable guide to a company's health, Whitman looks at assets, and prefers companies with holdings that can be readily valued - a bias that often leads him to financial and real estate concerns.
He and his team search worldwide for companies that can grow what they call net asset value, or NAV (Third Avenue's calculation of the company's intrinsic worth), by 10% annually. They buy only when a stock is selling at a discount to net asset value. "We buy growth - we just don't pay for it," Whitman likes to say.
Danger! Steep drop ahead
"Safe and cheap" makes for a comforting mantra. Rather than timidity, though, Whitman's approach actually calls for remarkable fortitude. It requires the nerve to pick through distressed companies that others are ignoring and demands the conviction to see big gains come to fruition.
Turnover at Whitman's flagship mutual fund, Third Avenue Value (TAVFX (Charts)), runs at less than 10%, meaning that the average holding period for a stock is more than ten years.
In the long run Whitman's patience has been handsomely rewarded. Over the past five years, for example, his fund has delivered annualized returns of 22.5%, topping the S&P 500 by more than seven percentage points. During the past decade Third Avenue Value has delivered about 12% a year, some five percentage points better than the S&P.
With a record like that, it's no wonder that even at age 83, Whitman says he intends to continue at the firm as long as he is "compos mentis." "If I could be a tennis pro, I would do that tomorrow," he quips. Instead, the avid tennis player recently signed a contract to stay on at Third Avenue for five more years. At the same time, the firm has strong successors in place, with Curtis Jensen, 45, as co-chief investment officer and Ian Lapey, 40, assisting Whitman on the Value fund.
Whitman's willingness to go against the crowd was on display this summer. As investors were bailing out during Wall Street's wild ride, "We were buying like crazy," he says. To ensure he had a margin of comfort, he stuck to well-financed companies that would not need regular access to new funding from capital markets in the next few years. Here are three of his purchases...
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