Top-performing manager, 81, keeps working

Martin Whitman, the manager of the Third Avenue Value Fund, hired Curtis Jensen in 1995 as a successor. More than a decade later, the 81-year-old Whitman hasn't set a retirement date, and his mutual fund was on pace last month to outperform the Standard & Poor's 500 index for a sixth consecutive year.

Investments in Brookfield Asset Management, the owner of Manhattan's World Financial Center, and Toyota Industries, a builder of cars for Toyota, helped the fund climb 15.3 percent last year, as of Dec. 7, nearly triple the S&P 500 index.

"The best years were ahead of him, as we found out," said Jensen, 43, the co-head of investments at Third Avenue Management and manager of the New York-based firm's small-cap value fund. "Marty has absolutely no plans to retire. It isn't in his DNA."

The $6.6 billion Third Avenue Value Fund ranked second of 92 funds tracked by Bloomberg that invest in stocks deemed cheap relative to corporate profits. The top performer was the Fidelity Value Discovery Fund, which was up 18 percent.

Whitman, an investment banker and turnaround specialist for bankrupt companies, joined Third Avenue in 1986 and started the value fund four years later.

Jensen, a former student of Whitman's at the Yale School of Management in New Haven, Conn., said the topic of succession came up shortly after he was hired a decade ago.

"It's been at the front of our mind for many years," he said.

Brookfield is among the five largest holdings of Third Avenue's value and small-cap value funds.

The Toronto-based company, known as Brascan until November, has doubled in value during the past two years. Third-quarter earnings from leasing properties such as the World Financial Center rose 15 percent as office rents in the U.S. increased.

Brookfield Chief Executive Officer Bruce Flatt was among the featured speakers at Third Avenue's annual conference recently in New York.

Flatt said Brookfield, which has been shedding investments in resource companies, aims to more than double assets under management to $100 billion by 2010.

Toyota Industries, a highflying stock for most of 2005, is the fund's biggest holding.

"If I'm going to be in the auto industry, I'm so glad it's in Toyota rather than some American company going down the tubes," Whitman said at his firm's conference Nov. 3.

The Third Avenue Value Fund has 15 percent of its assets in real-estate companies.

Jensen's approach has been shaped by Whitman, who earned a master's degree in economics in 1958 from the New School for Social Research in New York. That should ease concern about succession, said Kerry O'Boyle, an analyst at Morningstar, an industry-research firm in Chicago.

"Jensen has been there long enough and embraced the philosophy for us to believe he can carry along," O'Boyle said.

Succession is typically "handled better at small boutique shops as opposed to big fund shops where they bring in a new manager that does whatever he wants," he said.

"If a manager retires, I put a shorter leash on the fund," said Ronald Sugameli, who manages $350 million for New Century Portfolios in Wellesley, Mass., that he invests in about 60 mutual funds, including Whitman's. "As long as the performance continues to be positive relative to its peer group, we're pleased to hold the fund."

Third Avenue Management employs 10 money managers and seven analysts. The staff has expanded each year, and David Barse, Third Avenue's CEO, said a search is under way to find a lieutenant for Jensen.