AVTR - Avatar Holdings

[prunes]

Tweedy, Browne, which Seth Klarman indicated as one value oriented fund he really respects, reported that it acquired beneficial ownership of AVTR at year end. The company is a real estate developer with operations in Florida (80%) and Arizona (20%). There is a good write-up on this on VIC from February 2010 if you have a membership.

 

The company has sufficient cash to pay down all its outstanding liabilities. It also has been using cash to buy land from distressed developers.

 

I know some of you are looking for inflation hedges--even if the above doesn't pan out, this could be a good one.

 

A brief tour of the Yahoo message board indicated that the location of this land might be undesirable economically. I'm not too familiar with it myself. Further, the board indicated that management compensation and overall G&A spending might be too high. However, I view the endorsement by Tweedy, Browne to mitigate these risks to a certain extent.

 

Is this on any of your radar screens?

[prunes]

Correction: Tweedy actually bought it's stake in 2008 for around $40 (youch!). It has since been reducing its stake and it was that disclosure that I saw.

[Myth465]

Piggy backing is a dangerous game. I do it though, quite a bit actually.

[stahleyp]

Klarman knows way more about investing than I ever will, but I don't see a ton to like about TweedyBrowne. Yeah, I know they used to be Buffett's brokerage guys. If you look at what they've done in the past 10 years. Their 2 biggest funds, TWEBX (underpeformed) and TBGVX (barely outperformed) have basically matched their category peers. Since inception things look a bit better, though. Their funds also are pretty expensive, running about 1.4% on the TBGVX. 1.4% on a nearly $5 billion fund!! Is that really necessary?

[prunes]

I realize that piggybacking is dangerous. I follow some managers' 13Fs to try and discern special situations opportunities... I wouldn't leap into something based on blind faith.