Martin J. Whitman

Martin J. Whitman (born September 30, 1924) is an American investment advisor and a strong critic of the direction of recent changes in Generally Accepted Accounting Principles (GAAP) in the U.S. He is founder and Co-Chief Investment Officer of Third Avenue Management, and Portfolio Manager of the Third Avenue Value Fund.

Whitman was born to a Jewish family in the Bronx, New York. He served in the military in the Pacific during World War II. Returning to New York state, he graduated from Syracuse University with a B.S. in business administration in 1949. He also has a M.A. in economics from the New School of Social Research. He then worked for various investment firms in New York City before setting up his own company in 1974, M.J. Whitman & Co. His first big successful investment was his purchase of $100,000 in mortgage bonds issued by the bankrupt Penn Central Railroad. He later sold the bonds for five times his original investment.

He has used the quarterly shareholder letters of his fund as a running critique of what he calls the "primacy of the income account" ("primacy of the income account" means that corporate wealth is created only by flows, i.e., having positive earnings, and/or cash flows for a period), which he argues serves only short-term speculators rather than long-term investors. For example, in his July 31, 2004 letter [1], he writes that recent developments in GAAP "...increasingly impose unneeded and counter-productive burdens on American corporations, American management and American capital markets. GAAP... ought to be geared toward meeting the needs and desires of creditors rather than the needs and desires of short-term speculators... [T]he amount of money invested in credit instruments of all types in our economy dwarfs the amount of funds invested in equities." Furthermore, "Most private companies, given a choice, seek to enhance [Net Asset Value] by means other than having reported operating income, which is taxable at maximum rates."

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