Core Thesis - General Mills, Inc. (GIS) is viewed as a compelling contrarian value opportunity in the consumer staples sector, trading approximately 46% below its historical peak while maintaining stable profitability and strong cash generation [2][3] Company Overview - GIS operates across five segments: North America Retail, Convenience Stores & Foodservice, Europe & Australia, Asia & Latin America, and Pet, with the Blue Buffalo acquisition enhancing its high-growth pet food segment [2][3] Brand and Market Position - The company benefits from strong brand equity, scale advantages, and category leadership in cereals, refrigerated dough, and super-premium ice cream, alongside geographic diversification [3] Growth Catalysts - The investment case is supported by multiple growth catalysts, including mid-to-high single-digit organic growth in the pet food segment, international expansion, health and wellness repositioning, and e-commerce acceleration [3] Financial Performance - Free cash flow is robust at approximately $2.1 billion, supporting a dividend yield of over 4% and providing flexibility for deleveraging and potential share repurchases [4] - Operating margins have expanded to 21.9% despite declining revenues, demonstrating financial discipline through controlled capital expenditures and debt reduction [4] Valuation and Returns - GIS is trading at an attractive valuation of 10–12 times earnings with high-single-digit free cash flow yields, offering downside protection and potential for multiple expansion [5] - Base-case expectations indicate total returns of 25–35% over 2–3 years, driven by margin improvement, revenue stabilization, deleveraging, and dividend support, while a bull scenario could yield 40–50% upside [5] Risk Factors - Risks include persistent category decline, private label competition, and execution challenges, but the combination of income generation, cash flow stability, and contrarian valuation presents an asymmetric risk-reward opportunity for value-oriented investors [6]

Performance Overview - The Third Avenue Value Fund achieved a return of 11.85% for the quarter ending September 30, 2025, outperforming the MSCI World Index (7.36%) and the MSCI World Value Index (5.98%) [2] - Year-to-date, the Fund returned 26.04%, compared to 17.83% for the MSCI World Index and 17.54% for the MSCI World Value Index [2] - Annualized performance for the trailing three-year and five-year periods was 23.24% and 23.66%, respectively [2] Key Contributors to Performance - Capstone Copper was the largest contributor, benefiting from the expansion of its Mantoverde mine and rising copper prices due to tight global supplies and operational disruptions in major mining regions [3] - Lundin Mining also contributed positively, aided by rising copper and gold prices, with its Brazilian copper mine being a significant asset [3] - Warrior Met Coal's Blue Creek project began production ahead of schedule, expected to significantly increase production volumes and reduce costs [4] - Close Brothers benefited from a favorable U.K. Supreme Court ruling, improving the outlook for U.K. lenders involved in motor finance [5] Negative Contributors to Performance - Negative contributions were limited, with easyJet, Ayala Corp., S4 Capital, Interfor, and Boise Cascade noted as underperformers [7] - Boise Cascade and Interfor are exposed to the cyclical downturn in U.S. housing starts and repair activity, presenting potential opportunities for undervalued investments [7] Investment Themes - European companies were significant contributors to performance, with Deutsche Bank and Bank of Ireland showing improved health and operating performance [8][9] - The Fund reduced its position in Deutsche Bank despite its strong performance, indicating a strategic shift in investment focus [9] New Investments - The Fund initiated positions in Boise Cascade, Rogers Corp., and Ayala Corp. during the quarter [32] - Boise Cascade is viewed as inexpensive with potential for recovery in housing-related demand, supported by a strong financial position [34] - Rogers Corporation has valuable intellectual property but has struggled to grow; recent management changes may enhance its competitive position [38] - Ayala Corp. is trading at multi-decade low valuations, with potential catalysts for value creation through asset monetizations and share repurchases [40][41]