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'Mini-Berkshire' Looks for Value in Financials, Finds Gains in Oil
Monday June 2, 9:51 am ET
By the tickerspy.com Staff
Diversified holding company Leucadia National (NYSE: LUK - News) has frequently been called a "mini-Berkshire Hathaway" (NYSE: BRK-A - News, BRK-B - News) because of the firm's ability to bring in impressive returns from investments in a wide variety of sectors, ranging from medical products, to telecommunications, to wineries.
Chairman and CEO Ian Cumming and President and COO Joseph Steinberg have recently added some major exposure to financials to the Leucadia portfolio including a big equity stake in investment bank Jefferies (NYSE: JEF - News), which like many Wall Street firms has been hit hard by the credit crunch. The stake was cleared by regulators in May. Investors clued into Leucadia's incredible track record watch the firm's moves closely; an investment in Cumming and Steinberg's firm has returned an astonishing compounded annual growth rate of 33.9% since inception, according to Leucadia's most recent annual report.
Though Leucadia invests in a wide range of firms, it has stakes in only a handful of U.S.-listed equities (The Jeffries stake has been added to significantly since the end of Q1). Aside from Jeffries, Leucadia has been looking selectively for value elsewhere in the financial sector.
Its most recently disclosed holdings, from the end of Q1, include independent auto finance company Americredit (NYSE: ACF - News; and Leucadia has continued to up its stake there since the end of Q1, according to SEC filings) and financial services firm International Assets Holding Corporation (Nasdaq: IAAC - News). Leucadia also has a stake in independent oil and gas company GeoResources (Nasdaq: GEOI - News), a small cap that has shot higher along with several other names in the sector.
In addition, Leucadia is looking overseas. The firm opened up a new stake in Argentinean agricultural company Cresud (Nasdaq: CRESY - News) during Q1.
Looking at tickerspy.com's graph charting the performance of Leucadia's end-of-Q1 holdings so far during Q2, one can see that the holdings are doing very well, primarily thanks to GeoResources' outperformance. If you want to see how your performance stacks up to this "mini-Berkshire" or some other Leucadia holdings, visit tickerspy.com to see the firm's top holdings and a chart of their combined performance.
Leucadia National: 5 Guidelines for a Well Run Holding Company
by: Tim Plaehn posted on: August 04, 2008 Seeking Alpha
When I find a company of interest and then find very little readily available information about the company, my interest is definitely increased. Leucadia National (LUK) definitely fits the bill. LUK is a diversified holding company that is the result of the vision of two men, Chairman Ian Cumming and President Joseph Steinberg. They took control of the company that is now Leucadia National in 1978 and have invested in a wide range of industries and companies with these guidelines:
Don’t overpay, no matter what the maddening crowd is up to.
Buy companies that make products and services that people need and want and provide them as cheaply as possible with consistantly high quality. Lower cost and higher quality is a relentless and never ending-task.
Earnings sheltered by NOLS are more valuable than earnings that are taxed!
Compensate employees for performance and expect hard work and honesty in return.
Don’t overpay!
Source: 2006 Letter from the Chairman and President.
In my hunt for information on Leucadia I found the best overview of the company’s current businesses at Reuters. You can read the overview for yourself here. When you visit Leucadia’s website you find a very bare bones, minimum information necessary site. I think the best way to get a feel for the company is too read through a couple of the Chairman and President annual letters. They are very candid about the businesses they own and what they are trying to accomplish with them.
What you get here is a company that is willing to wait for their investments to yield profits and not managed for year over year earnings. This shows up in the volatility in annual earnings. The long term results have been outstanding with book value compounding at a 21% annual rate and the stock at 26% per year. What you have here is a $10 billion market cap company with tremendous long term results and earnings estimates on Yahoo Finance from exactly zero analysts. Just the type of stock that I like.
A final positive. Leucadia is the owner of my absolute favorite winery, Pine Ridge in Napa Valley. During the 4 years we lived in Sacramento we visited wine country several times a month and Pine Ridge was definitely the favorite of all that we tried. Pine Ridge makes excellent wines year after year, and if they are an indication of how the other Leucadia companies run, I am not surprised at the long term results.
I am adding LUK to this site’s Special Opportunities Portfolio and plan to start adding shares to my own account.
Financial sector may hold some bargains
By MarketWatch
Last update: 9:38 a.m. EDT June 13, 2008BOSTON (MarketWatch) -- Charles Mizrahi, editor of the Hidden Values Alert newsletter, says that true, long-term value investors should actually want "for the market to come down another 5% to 10% ... that would create a lot more value plays than I am seeing now."
In a radio interview with Chuck Jaffe, MarketWatch senior columnist, Mizrahi noted that "there are some companies in the financial sector getting whacked for no reason other than they are in financials," and said that's one place where an investor with an iron stomach might go looking for bargains.
Mizrahi said that some of the best values in financial stocks involve those focused more on real estate than banking. He made Brookfield Asset Management (BAM) Brookfield Asset Management Inc. (BAM) a buy and said he'd buy Leucadia National (LUK) Leucadia National Corporation (LUK) if the price pulled back a bit to make it a better value.
Leucadia's Unnatural Gas
http://www.fool.com/investing/value/2008/05/12/leucadias-unnatural-gas.aspx
Toby Shute
May 12, 2008
In a recent look at Valero Energy (NYSE: VLO), I mentioned that the superinvestors at Leucadia National (NYSE: LUK) were sniffing around some of the firm's refineries. It turns out that Alon USA (NYSE: ALJ) will become the proud owner of one of those facilities, located in Louisiana.
The folks at Leucadia are becoming increasingly active in the natural resources sector, and their moves are always worth watching. While the Krotz Springs refinery is falling into different hands, Leucadia still has a very interesting project located not far to the southwest, at the Port of Lake Charles.
Before we get to that, we need to talk about petroleum coke. No, this isn't an ill-conceived flavor of Coca-Cola. Petroleum coke, or pet coke, is a heavy fuel source produced when oil refiners split crude oil into different commercial products. Like coal, pet coke can be burned to generate power. Also like coal, pet coke can be gasified in order to provide cleaner-burning "substitute natural gas," along with other commercial byproducts.
Leucadia's wholly owned subsidiary, Lake Charles Cogeneration, has proposed to build a $1.6 billion petroleum coke gasification facility. KBR (NYSE: KBR) has been hired to provide the design engineering and procurement services for the project, which is based on proven technology from General Electric (NYSE: GE). The idea is to pipe "substitute natural gas" and hydrogen to local utilities and other industrial users on long-term contracts.
The project has been well-received locally, judging by the successful sale of $1 billion in bonds last month. It's also important to note that Lake Charles is located in a hurricane-affected region of the state and thus qualifies for Gulf Opportunity Zone tax incentives. Not only are the bonds tax-exempt, but they also offer very low interest rates. Super-attractive financing is one sure way to draw the attention of superinvestors.
Lest you think this is some pie-in-the-sky venture, there are successful gasification projects already out there. One is operated by CVR Energy (NYSE: CVI), a refiner that parlays its pet coke supply into low-cost fertilizer. I told you fertilizer fanatics that I'd find you a better investment idea than the recent overhyped IPO, but I'm afraid that CVR is too hairy, given recent accounting troubles. So stay tuned. And in the meantime, keep an eye on those Leucadia boys.
Leucadia National Corporation Announces 2007 Results
Friday February 29, 11:05 am ET
NEW YORK--(BUSINESS WIRE)--Leucadia National Corporation (LUK – NYSE) today announced its operating results for the year ended December 31, 2007. During 2007, the Company recorded an adjustment that reduced the deferred tax valuation allowance and credited income tax expense by $542,700,000. The adjustment results from the Company’s conclusion that it is more likely than not that it will have future taxable income sufficient to realize that portion of the net deferred tax asset. Net income was $484,294,000 (including the $542,700,000 adjustment referred to above) or $2.10 per diluted common share for the year ended December 31, 2007 compared to net income of $189,399,000 or $.85 per diluted common share for the year ended December 31, 2006. Net income also included income of $3,486,000 or $.01 per diluted common share for 2007 and $59,630,000 or $.25 per diluted common share for 2006 related to discontinued operations, including gain on disposal.
Leucadia National Leads $7 Million Investment in Avistar
Monday January 7, 4:40 pm ET
Company Insiders Invest $3 Million of Total to Fund Growth
SAN MATEO, Calif.--(BUSINESS WIRE)--Avistar Communications Corporation (Nasdaq:AVSR - News), a provider of video-enabled unified communications solutions, announced that it concluded a financing round on January 4, 2008 of $7 million of convertible debt, led by Leucadia National Corporation (NYSE:LUK - News). Five of Avistar’s seven Directors, including its new CEO and its Chairman, were among the other investors who contributed $3 million of the total. Raising working capital to fund implementation of its new “go-to-market” strategies is a central element of Avistar’s turnaround strategy, as described by the company in a press release dated November 8, 2007.
“Avistar’s management is pleased to begin an association with Leucadia, which shares our confidence in the growth opportunities for our business. We believe the investment by Leucadia and a number of members of the Board and management is a strong validation of our new strategic initiatives, the significant structural changes that are now beginning to gain traction, recognition of the progress made by the new management team in a very short period of time, and the long-term earning potential of our intellectual property and product portfolio,” said Simon Moss, Avistar’s new CEO. “Leucadia’s investment track record, as evidenced by its 33% compounded annual growth rate in share price from 1978-2006, speaks volumes about its ability to identify successful long term investments that others miss. I believe Avistar will benefit greatly from its association with Leucadia and look forward to a successful and robust relationship.”
The notes are convertible into Avistar common stock after the first anniversary, and carry a 4.5% interest rate. The notes purchased by the investors have a conversion price of $.70 and a two year term. Avistar’s common shares closed at $.38 on Nasdaq’s Capital Market on Friday, January 4, 2008.
“Avistar has had a consistent annual growth rate in revenue and income from our licensing activities of greater than 40% over the last several years, owing to a sizable and highly monetize-able patent portfolio and field-tested product portfolio”, said Robert Habig, Avistar’s CFO. “We believe we are effectively positioned in terms of business strategy, existing clients demonstrating the value-added benefits and scalability of our products, and our technology portfolio, to address opportunities created by an accelerating unified communications market.”
About Avistar Communications Corporation
Avistar is working to define the future of unified communications and collaboration by inventing and delivering integrated visual communications software that helps companies of all sizes improve business results. From the desktop, from the laptop and from conference rooms, Avistar delivers enterprise-quality and easy-to-use audio/video conferencing, multi-party videoconferencing, and integrated data sharing anywhere in the world. By integrating visual communications with enterprise application software, Avistar incorporates communications into the daily workflow and seamlessly connects communities of users within and across enterprises.
Founded in 1993, Avistar is headquartered in San Mateo, California, with offices in New York and London. With more than 15,000 seats sold across 40 countries, Avistar’s global deployments of its unified visual communications desktop software are among the largest in the world. Avistar holds a portfolio of 76 patents for inventions in the primary areas of video and network technology and offers technology and IP licenses to companies in video conferencing, rich-media services, public networking and related industries. Current licensees include Sony Corporation, Polycom, Inc., Tandberg ASA, Radvision Ltd. and Emblaze-VCON.
For more information, visit www.avistar.com.
LOL! Yeah, all "0" shares! Last years trash disposal really helped. Expecting to pay an extra 24-28k in taxes, throwing out the garbage to offset capital gains, resulted in a 10k return.
I don't know...... Calculating all the gains and losses..... I'm probably sitting about even after 8 years of playing this game. Bought too much hi-tech crap during the bubble.....
16% is very good. Must be all that HRCT pushing you up - lol.
My portfolio peaked at just over +25%. Sittin' at 16% now.
Yesterday and today have been good. My stuff is almost back to where it was before the November meltdown.
Back to even. Bought this one about 5ive bucks too soon. Not much, so I have a little wiggle room to average down if need be. :~)
Leucadia National Corporation Announces Cash Dividend
Tuesday December 4, 4:21 pm ET
NEW YORK--(BUSINESS WIRE)--Leucadia National Corporation (NYSE:LUK - News) announced today that its Board of Directors has declared a cash dividend equal to $.25 per Leucadia common share payable on December 28, 2007 to record holders of Leucadia common shares on December 17, 2007.
S&P Picks and Pans: Berkshire, Countrywide, Deere, Staples, A&F
Analyst opinions on stocks making headlines Wednesday
S&P MAINTAINS HOLD RECOMMENDATION ON CLASS A SHARES OF BERKSHIRE HATHAWAY
From Standard & Poor's Equity Research
BRKA; $135,000
We are raising our 12-month target price on the shares of this insurance-based conglomerate by $15,000, to $140,000. The revised target price assumes the shares trade at 17.6X our 2008 operating EPS estimate of $7950 and at 2.2X our projection of year-end 2008 tangible book value. Although both of these metrics represent significant (more than 20%) premiums to the company's insurance peers, we believe the premiums are warranted by what we see as Berkshire's superior financial strength compared with most peers. /C. Seifert
S&P MAINTAINS HOLD OPINION ON SHARES OF COUNTRYWIDE FINANCIAL
CFC; $9.25
Countrywide reiterates that it has enough liquidity to continue ongoing operations, stating that it has $35.4 billion in liquidity, up from $33.6B in September. It should also be able to tap FHLB loans and increase deposits. However, a possible decline in mortgage purchase activity by the government-sponsored enterprises will likely reduce Countrywide's ability to originate loans. We are lowering our 2007 and 2008 EPS estimates by 39 cents and 42 cents, to a loss of $1.54 and EPS of $1.60, and reducing our target price by $6 to $11, 6.9X our 2008 EPS estimate, a discount to historical levels. /S. Plesser
S&P REITERATES HOLD ON SHARES OF DEERE & CO.
DE; $147.90
October-quarter EPS of $1.88 vs. $1.20 beats our $1.39 estimate on stronger revenue in the agricultural equipment and commercial and consumer segments. We see robust demand for international farm equipment into 2008 and think gains in farm equipment, on solid global economies and robust demand for renewable fuels, will outweigh weakness in construction and forestry. Deere sees fiscal 2008 (Oct.) net income of $2.1 billion. We are raising our fiscal 2008 EPS estimate by 50 cents to $9.30; and our 12-month target price to $149 from $132, 16X our fiscal 2008 EPS estimate, a traditional mid-cycle multiple for Deere. /P. Wang
S&P REITERATES BUY RECOMMENDATION ON SHARES OF STAPLES INC.
SPLS; $20.50
Ahead of October-quarter earnings, to be reported on 11/27, we continue to find the shares attractive. We expect the company to post EPS of 41 cents on a comp store sales increase of 1.0%. While we believe back-to-school was successful in driving traffic, we think consumers are bargain-hunting more, and that margins will be adversely affected. Despite this, we believe that both International and North American Delivery businesses remain strong, and we are maintaining our fiscal 2008 (Jan.) and fiscal 2009 EPS estimates of $1.43 and $1.64, respectively. We keep our discounted cash-flow-based target price at $29. /M. Souers
S&P INITIATES COVERAGE ON SHARES OF LEUCADIA NATIONAL WITH HOLD OPINION
LUK; $42.69
Leucadia is a diversified holding company with interests in timber and plastics manufacturing, telecommunications, real estate, energy and healthcare. The company's approach is to focus on return on investment and cash flow and its management continually evaluates dispositions and acquisitions. We think Leucadia's gaming and biopharmaceutical development units have the most growth potential. We forecast 2007 EPS of 26 cents and 2008's of 35 cents. We are setting a 12-month target price of $48, based on our book value metric. /S. Benway, CFA
S&P MAINTAINS STRONG BUY OPINION ON SHARES OF ABERCROMBIE & FITCH
ANF; $74.56
October-quarter EPS of $1.29 vs. $1.11 is 6 cents shy of our estimate. Direct-to-consumer sales rose 48%, outpacing 13% total sales gain. Higher direct business expenses pressured operating margin, as did rise in wages and investment in A&F's 5th concept, which launches in January. We see broad consumer appeal of A&F's brands supporting low-single-digit same-store sales growth in the January-quarter despite tough retail conditions, although we also expect margin pressure from growth in direct sales. We trim our fiscal 2008 (Jan.) EPS estimate by 10 cents to $4.20 but reiterate our 12-month target price of $95. /J. Asaeda
I can't afford to have you buy anything more that I own - lol.
Well...... Shoulda waited another day. Got any other short targets you'd like me to purchase? lol!
Leucadia National Corporation Announces Nine Month 2007 Results
Thursday November 8, 4:55 pm ET
NEW YORK--(BUSINESS WIRE)--Leucadia National Corporation (LUK – NYSE) today announced its operating results for the nine month period ended September 30, 2007. Net income was $38,561,000 or $.18 per diluted common share for the nine month period ended September 30, 2007 compared to net income of $178,190,000 or $.80 per diluted common share for the nine month period ended September 30, 2006. Net income per share also included income of $.01 for the 2007 period and $.24 for the 2006 period related to discontinued operations.
For more information on the Company’s results of operations for 2007, please see the Company’s Form 10-Q for the nine months ended September 30, 2007, which was filed with the Securities and Exchange Commission today.
Probably a good time to get them. Just stay away from C.
Just got a tender offer on a $20k bond. Got a little LUK and added some BAC with the funds.
LUK 51.52 +0.48 (+0.94%) 51.52 x500 51.54
It's up nearly 100% this year alone.
I have..... Plenty of times..... :~(
Shareprice is heading into split territory.
Hmmmm?
Click on the one year chart above. Hard to get much better than that.
Don't buy!!!!! I have money in this one!
You are a jinx in the market - lol.
Ya know if I buy now we're headed back to 32 within days... Right? lol!
LOL - They don't know what to do with a company whose stock price just keeps going up.
Okay, this is starting to pizz me off.
Where's the friggen braggarts!
lol!
LUK may see a small soon, then up IMO
LUK is trading near its upper Bollinger Band. Stock price is high relative to its recent price action
LOL up to 48.22 now :)
The trailing P/E of 99.3 is correct. The price rise and activity is being caused by all the acquisitions which will affect the projected P/E for this year.
Institutional ownership has increased 3% in the last month to 64%. I can't find any analysts following this stock so I don't have any future projections to work with.
The probable reasons for the lack of analysts is that LUK was just added to the S&P 500 a couple of months ago.
Found it in AOL's detailed quotes. 208.17. Any idea why the huge discrepancy?
Ooops. PE ratio here is only 99. Hmmmm? where did I see that 200.........
Yeah, the 200+ PE ratio has kept me cautious of buying. Seems that LUK is affected very little from the volatility of the current market though. And, the long term chart shows a nice steady climb. I probably should pick up a few shares...
Too bad we didn't discover this in 1990. Approx. $20,000 investment in LUK back then would be worth about $460,000 today.
Still...... I have no complaints. LUK is up 62% from when I bought it only a few short months ago.
Up nearly 50% already. Not too shabby!
anyone, i'm thinking about putting a good portion of my portfolio into luk. i've been doing study on this company for a while and they have better returns that berkshire hathaway and they haven't ever seem to have disappointed for the long term investor. my question to you is a hypothetical if you will. if everything goes to hell with a stock market crash, is luk insulated enough to not feel much of an effect? i notice that it usually doesn't trend with the dow or s&p. also, has management been pretty honest in their dealings and are they shareholder friendly in your opinion?
I've gotten a few special cash dividends, not through the sale of company shares that I can recall, but what the heck, there's a first time for everything! lol!
This isn't a penny stock. They don't sell shares and then do a cash dividend. You are probably correct about an acquisition.
Probably going to pick up another undervalued company to add to their portfolio. Or, possibly, a special cash dividend?
I wonder what they are planning on doing with the $250 million they will get as a result of selling these shares? The company is not cash poor so they must have something in mond.
LOL!
nor shall there be any sale of securities mentioned in this press release
today announced the proposed issuance and sale of up to 5,500,000 of its common shares
Leucadia National Corporation Announces Proposed Issuance and Sale of Common Shares
Friday August 24, 9:44 am ET
NEW YORK--(BUSINESS WIRE)--Leucadia National Corporation (NYSE:LUK - News) today announced the proposed issuance and sale of up to 5,500,000 of its common shares, from time to time through Jefferies & Company, Inc., its sales agent. Agency sales, if any, will be made on a best efforts basis by the sales agent pursuant to the terms of a sales agreement between Leucadia and the sales agent, and will be pursuant to an effective shelf registration statement on file with the U.S. Securities and Exchange Commission.
This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, Leucadia's common shares or any other securities, nor shall there be any sale of securities mentioned in this press release in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
The offering of common shares may be made only by means of a prospectus. A copy of the prospectus relating to the securities can be obtained from Jefferies & Company, Inc., Capital Markets, 520 Madison Avenue, New York, NY 10022: (212) 284-2342.
I got 'em both. Just in case! lol!
Which is why I own WFC.
Found it. Volatile Markets: Bank of America (BAC) offers low risk, high reward
Posted Aug 16th 2007 11:36AM by Georges Yared
When a sector gets hit by negative news and lingering doubts, the good companies come down in value as well as the not-so-good companies. It's a "shoot first, ask questions later" scenario. Well, the time has come to step up to the plate and load the boat on Bank of America (NYSE: BAC). The story and the opportunity are just too tempting to pass up and this story needs to be told!
It is very important that investors clearly understand the differences between "pure" mortgage plays, leveraged mortgage plays and a giant, diversified bank. Several pure mortgage players have been hurt worse than expected. They are one-trick ponies with little diversification in their earnings and revenue structure, and have either severely reduced their earnings outlook or have even closed their respective doors.
Not only are questionable past mortgage practices at the forefront, but these smaller institutions DO NOT HAVE THE BALANCE SHEETS to carry these loans on their books -- they must package and re-sell them. With pricing on mortgage paper out of whack, these smaller, pure mortgage players are suffering from a double whammy.
The leveraged plays popular with hedge funds have come back to roost in a vicious manner. Bear Stearns had to liquidate two sizable portfolios because the leverage factor was eight to one. Once the value of the paper fell more than 12.5%, it was over: the funds lost the minimal equity-base and actually went negative in value. There was no choice, they had to be sold, thus exacerbating the selling pressure, not to mention the selling volume. All in all a negative perfect storm.
But this article is about Bank of America.
Bank of America is a major mortgage player in the United States. Yes, it has had to raise the provisions for bad debts -- $1.81 billion this past second quarter, up from $1.24 billion in the first quarter. But, BAC DOES NOT need to package its mortgages and re-sell them to lessen its risk profile. BAC can hold the paper in its own portfolio.
Also, no leverage, therefore, no need to sell into the depressed market place any questionable paper. BAC can actually use its massive capital base and buy other people's paper at hugely discounted prices. BAC has not commented or admitted as such as this is proprietary trading information. But the power to do so is in their hands.
Bank of America is a diversified, national bank with a revenue stream that is extremely visible. Its services include a huge consumer and small-to-large businesses franchise, and a loan portfolio, other than mortgages, that is second to none. BAC has historically raised its dividend and currently pays an annual amount of $2.56 per share, which translates to a yield of 5.30% based on its Friday closing price of $48.60. The yield is higher than the U.S. Treasury 10-year note!
It appears the Federal Reserve is going to drop the key interest rate from the 5.25% level by perhaps 50 basis points, if not more. If this occurs, money will flow to where yields are secure. The BAC dividend at a current 5.3% yield, would have to go down to remain in lock-step with the yield market, therefore the stock would go up in value. I expect BAC to earn $4.92 per share for 2007 and $5.35 per share in 2008. That's superior dividend coverage, over 2 to 1.
BAC has upside potential these next two years of 30-40% and if the dividend is included, the total return could rise to 40-50% over the two years. The Bank of America is a strategic acquirer of geographically advantageous banks. The LaSalle Bank, headquartered in Chicago, should be closed in the fourth quarter thus putting BAC in a very strong position in Illinois, Indiana and Michigan. As valuations remain depressed in the sector, BAC may acquire other strategic assets to bolster its nationwide presence.
The risk is low and the reward potential is high...
Georges Yared is the CIO of Yared Investment Research and the author of Stop Losing Money Today.
Yeah, for now. I'm wondering why the bank stocks did so well when the big fear is loan defaults.
The Fed lowered the interest rate this morning to stop the skid. Apparently it is working.
The NYSE uses specialists on the floor of the exchange.
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