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Skiing to profits with Vail

Posted by: Aaron Pressman on June 23, 2006

Marty Whitman, who runs Third Avenue Capital, is a favorite manager of mine. His deep value approach often turns up great stock plays because he’s delving into minutia that too many people ignore. Marty’s first quarter fund commentary came out this week and two of the company’s funds have added shares of Vail Resorts (Symbol MTN), which ought to make the ski slope owner worth a look from other investors, too.

“While Vail’s business has a meaningful element of unpredictability and lumpiness, it also possesses high barriers to entry, brand strength, and assets that are very difficult to replicate,” Curtis Jensen, manager of Third Avenue’s Small Cap Value fund, wrote in the commentary. “Management, which recently changed at the CEO level, appears to be focused on the right things, prudently developing its assets, and paying down debt.”

We can’t say at what price Third Avenue bought. In the quarter from February through April, Vail shares traded between about $30 and $38. But they haven’t risen much lately, stuck around $34. And one nice thing about copying moves by deep value investors like Whitman is that their stock picks take years to play out so jumping in even a few months later usually doesn’t hurt.

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