Third Avenue Sheds 489,500 Shares of Symantec
- By Kyle Ferguson
Martin Whitman is a Bronx native who has more than 67 years of investment experience. Whitman graduated from Syracuse University and spent the next 25 years split between working as a security analyst and an investment banker for Sears.
Then in 1974, he founded M.J. Whitman LLC, a full service brokerage. Sixteen years later, he founded Third Avenue Funds, which he ran until 2012 when Robert "Chip" Rewey took over active duties. Rewey now oversees the Value Fund and four others at Third Avenue. Rewey attributes much of his investment philosophies from learning from his predecessor. He learned Whitman's investment style of maintaining a concentrated portfolio that focuses on company's financial strength. This creates a margin of safety to ensure that the company can weather the storm in times of adversity when obstacles arise that are outside of the company's control.
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The intrinsic value of SYMC
Third Avenue Value Fund currently owns 36 stocks with a total value of $1.18 billion dollars.
In the first quarter of 2016, Third Avenue sold 489,500 shares of Symantec Corp. (SYMC) from their portfolio.
Symantec provides security, storage and systems management products to help its customers protect their information and data. Its products and services protect people and information in any environment, from the smallest mobile device, to the enterprise data center, to cloud-based systems. Symantec operates one of the largest global threat intelligence networks. The company has more than 19,000 employees in more than 50 countries across the world.
Symantec has a market cap of $11.84 billion, a P/E ratio of 20.17, an enterprise value of $11.31 billion, a P/B ratio of 2.29 and a dividend yield of 3.31%.
In the third quarter of 2014, Third Avenue made the following comments on the Symantec holding.
"Symantec operates in security software and IT storage management businesses with its well-known brands, such as Norton. Recently, it has experienced management turnover, with its second CEO terminated by the Board in as many years. The surprise announcement was due to what appears to be slower than expected execution of a previously announced new strategy. The company had already started to embark on its new strategy to improve growth capabilities, including restructuring the sales force and eliminating duplicative organizational and operating structures. While not central to our original investment thesis, we have long thought that the company's businesses seem separable and saleable. Strategic firms could be potentially interested in its various businesses, though it could also be interesting to private equity firms given the strong cash flow characteristics of the business."
Below is a Peter Lynch Chart for Symantec Corp.
Symantec has a Financial Strength rating of 8/10 and a Profitability & Growth rating of 8/10 according to GuruFocus. The company also has six good signs. The company's Piotroski F-Score is 7, which indicates a healthy situation. The operating margin is expanding, the dividend yield is close to a one-year high and the price is close to a three-year low. The P/B and P/S ratios are near its three-year lows.
It is likely that Third Avenue reduced their position in Symantec because of the dramatic changes that have occured within the company. In 2015, the company hired five new executives and announced plans to separate their business into two independently publicly traded companies, one focused on security and one focused on information management. Symantec is also in a highly competitive environment, which could cause their revenues to decline in the future. The company's primary competitors are Carbonite Inc. (CARB), EMC Corporation (EMC) and Godaddy.com Inc. (GDDY).
Cheers to your investment success.
Disclosure: Author does not own any shares of this stock.
This article first appeared on GuruFocus.
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The intrinsic value of SYMC