Short-term manager turnover creates value opportunities
The guest argued that the high turnover rate of active managers forces a short-term focus on quarterly earnings, leaving long-term, structural turnarounds mispriced.
The argument
The average US active fund turns over its portfolio every six quarters, meaning managers focus heavily on near-term EPS beats. This short-termism allows patient investors to acquire businesses facing temporary headwinds or undergoing multi-year resource conversions at deep discounts.
Hear it yourself
"In addition, he comes from one of those legendary names in value investing, so it is always fun to connect with those great names and reflect a little bit in the great history behind value investing. So Matthew Fine of Third Avenue Management, welcome to the Value Investing with Legends podcast. Oh, thank you. Michael, thank you for having me. This is great. We're delighted to have you here. So Michael, as I was saying, is the portfolio manager of the Third Avenue Value Strategy portfolios, including the Third Avenue Value Fund and related separately managed accounts."