Third Avenue Small-Cap Value Fund Q3 2025 Letter

Performance Overview - The Third Avenue Small-Cap Value Fund returned 7.18% in Q3 2025, underperforming the MSCI USA Small Cap Value Index at 8.97% and the Russell 2000 Value Index at 12.60% [2] - The Fund's annualized returns for the trailing three-year and five-year periods were 15.11% and 16.09%, respectively [2] Positive Contributors - Supernus Pharmaceuticals (SUPN) was the largest positive contributor, benefiting from a strong financial position, profitability, an expanding neurology drug portfolio, and a successful acquisition [3] - Investors Title Company (ITIC) saw positive performance due to increased real estate refinancing activity [3] - UMB Financial Corporation (UMBF) successfully integrated its acquisition of Heartland Financial, showcasing operational competence [3] Negative Contributors - Atlanta Braves Holdings (BATRA) was a negative contributor, though it is perceived to have an attractive asset base and potential for favorable resource conversion [4] - UniFirst Corporation (UNF) faced pressure to demonstrate its value proposition after rejecting an acquisition offer from Cintas Corporation (CTAS) [4] - FRP Holdings (FRPH) was impacted by a lack of confidence in government spending affecting the D.C. metro area [4] Investment Strategy - The Fund focuses on acquiring companies in transitional states, aiming to capitalize on undervalued businesses with potential for future growth [5] - Investment activity emphasizes companies that are well-financed, trading at discounts to net asset value, and have identifiable levers for value creation [6] - The Fund's turnover rate is approximately 20%, indicating a long-term investment horizon of about five years, contrasting with the average turnover of 91.7% in the small-cap value fund universe [7] Types of Investment Opportunities - The Fund identifies three broad types of investment opportunities: 1. Companies facing industry-wide headwinds that can improve through restructuring [9] 2. Companies with current economic returns that have underappreciated self-help opportunities [9] 3. Event-driven situations that offer unique return profiles through transformational changes [9] Recent Transactions - Ambac Financial (AMBC) completed the sale of its legacy financial guarantee business, leading to a significant cash inflow and a transformation towards insurance distribution [11][12] - The Fund initiated new positions in Boise Cascade (BCC) and Rogers Corporation (ROG) during the quarter, while also adding to existing positions like UniFirst Corporation (UNF) [14] Company Profiles - Boise Cascade is a leading manufacturer and distributor of building materials, facing challenges due to slowing housing activity but retaining a strong financial position [15][16] - Rogers Corporation specializes in electronic and materials technology solutions, facing growth challenges but possessing valuable intellectual property and a strong balance sheet [18][19][20]