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Portfolio Management

Each new portfolio is individually constructed utilizing a risk reward profile to identify our best ideas at the time of investment. Portfolio construction decisions are the responsibility of the portfolio manager. We employ a multi-step buying process, which includes the following phases:

  1. The first phase of the process entails establishing initial positions in core holdings. The number of positions we purchase in this phase depends on security prices of our core holdings.
  2. The second phase consists of building the positions that remain in our price i jsutrange. If securities that we initially purchase run up, we will likely not buy additional shares until pricing is more favorable. During this phase, we also establish additional positions by selecting from the securities on our core list that are selling at prices we consider reasonable.
  3. The final step of the buying process is establishing full positions in each of the portfolio's holdings, often by averaging down in existing positions. At each step, while we are extremely price conscious we do not try to time the market. Depending on market conditions, a typical portfolio could require up to six months or more to get fully invested.

Third Avenue Management manages relatively concentrated portfolios, as we believe that diversification is a poor surrogate for knowledge, price consciousness and control. A typical portfolio will contain between 10 and 40 holdings. No attempt is made to mirror a benchmark, either by composition or weighting. In order to minimize portfolio risk, industry and individual security allocation will not exceed 25% by prospectus. In practice, however, allocations to individual securities will not exceed 10% (at cost) and 15% (at market). A 10% cash position will typically indicate a fully invested fund. This allocation will allow us to take advantage of opportunities as they may present themselves in the future.

Portfolio monitoring is ongoing.