Third Avenue Small-Cap Value Fund on Maximus, Inc.
Thesis
Third Avenue initiated Maximus after pessimism around government-efficiency efforts, funding lapses and AI disintermediation depressed the share price despite continued federal business growth. The team views Maximus as a technology-forward government contractor with deep subject-matter expertise and institutional knowledge embedded in difficult-to-replicate government programs. Management guidance and a substantial share-repurchase authorization reinforced confidence that the feared operational damage has not materialized. Internal AI deployment is already reducing costs in areas such as Veterans Affairs records processing, suggesting AI can improve rather than displace the business. Renewal of the Veterans Affairs contract, expansion from a new Air Force cybersecurity award and additional benefit-administration work could provide medium-term upside. The combination of business resilience and pessimism embedded in the valuation may also create strategic M&A optionality.
“At the current valuation we believe there is an attractive opportunity to invest in a technology leader in its field”
Key risks
- Government spending reductions or funding disruptions
- Failure to renew major government contracts such as Veterans Affairs
- AI disintermediation of government consulting and administration work