“In my lifetime, I haven’t seen opportunity like now”

by admin on July 30th, 2009

That’s a quote from Marty Whitman in The New York Times. More:

Like many value managers, Mr. Whitman’s fund has benefited from a snapback rally in financial stocks — his financial investments are located in Hong Kong. These stocks, which make up 39 percent of the fund’s $4.5 billion in assets, were down 60 percent last year even though the companies remained profitable. In the first half of this year, the stocks were up from 14 percent to 46 percent, yet they still sell at discounts to net asset value of 25 to 30 percent, according to Mr. Whitman.

The fund also has benefited from performing loans that Mr. Whitman bought in the first quarter of 2009, when they had yields to maturity of 25 percent or more. Since then, yields on his loan investments have come down to around 20 percent, but that’s still attractive, he said.

Mr. Whitman also sees opportunities in energy stocks.

In the third quarter of last year, Third Avenue Value increased its investment in EnCana, a Canadian oil and natural gas exploration company, and Nabors Industries, a gas and oil drilling company based in Bermuda, on whose board Mr. Whitman has served since 1991. Both stocks currently sell for under 10 times earnings.

And more from Whitman at the article’s end:

Mr. Whitman, along with other investment managers, has tweaked the stock-picking process in response to last year’s events — he now looks for companies that do not need to turn to the capital markets repeatedly for cash. But he remains fatalistic about markets like that of 2008. “I don’t think anyone can predict when a catastrophic market will hit,” he said. “No question if 2008 recurs, we’ll still look bad.”