Value Fund Navigates War, Achieves 7.28% Q1 Gain

The Third Avenue Value Fund reported a strong first quarter in 2026, with a return of 7.28%, significantly outperforming the MSCI World Index's -3.57% and the MSCI World Value Index's 1.18%. This performance occurred despite a backdrop of geopolitical instability, including a U.S. and Israeli military campaign in Iran, which initially caused a market downturn. The fund's strategy focuses on acquiring undervalued, well-capitalized businesses, with a recent emphasis on international and smaller companies.

During the quarter, the fund highlighted its investment in Tidewater Inc. (NYSE:TDW), a provider of offshore support vessels. Tidewater's share price closed at $64.67 on June 18, 2026, with a notable 39.08% gain over the past 52 weeks. A significant development was Tidewater's agreement to acquire Wilson Sons Ultratug for an all-cash sum, expanding its operations in Brazil's deepwater market. This acquisition was enabled by Tidewater's strong financial flexibility, which has supported previous consolidating acquisitions.

The investor letter also noted that prior to the military actions in Iran, non-U.S. equities and value strategies had performed well, with a weakening U.S. dollar. While energy sector investments, including Tidewater and Valaris, did not initially perform as expected, they became significant contributors to the fund's performance. Subsea 7, another offshore service business, is currently undergoing an industry-consolidation acquisition announced in July 2025.