MARTIN J.
WHITMAN
Martin
J. Whitman is another highly regarded value
investor who is also known to be an investing
philosopher. He has designed his financial integrity
approach called “safe and cheap.” Among Whitman’s
idealistic views to investing is believing that it
is “ill-advised” for investors to concentrate on the
trend of macro-factors such as employment, movement
of interest rate, GDP, etc. since those attempts to
predict their movement are nearly futile. Along with
the reputation as an investing philosopher, Whitman
has also been known for focusing on acquiring common
shares of companies with tremendously strong
financial position at a price reflecting meaningful
discount to the estimated NAV of the company
concerned.
In addition, Whitman has been identified as “buy and
hold” value investor. He purchases the stock of a company
when he believes that: the company has strong finances,
competent management. Also, he believes that the business
of the company must be understandable as well.
Furthermore, the company’s stock must not be expensive as
well. The market price is positioned substantially below
a conservative valuation of the business as a private
entity, or as a takeover candidate.
Whitman generally sells an investment only when there has
been a fundamental change in the business or capital
structure of the company, which dramatically affects the
investment’s innate value, or when he believes that the
market value of an investment is overpriced relative to
its intrinsic value.
Today, Whitman continues to be a strong critic of the
direction of recent changes in Generally Accepted
Accounting Principles (GAAP) in the U.S. He still serves
as Co-Chief Investment Officer, and Portfolio Manager of
the Third Avenue Value Fund. However, his role as an
investing Guru carries on as he shares his acumen on
investing. In 2000, Whitman wrote the book,
“Value Investing: A Balanced Approach” which featured
the "value investing" strategy. In the book, Whitman
discards the standard practice of excessive price
watching and replaces it with a "bottom-up" approach,
ultimately urging investors to learn how to take full
advantage of a host of real-world factors.