L - Loews

[Myth465]

Since it appears that Loews' mission in life is to trade below NAV

 

LOL

 

Like watching paint dry.

[Palantir]

Yeah, I'm a little bit bitter. I bought them because they were "trading below IV", they had "owner operators" who believed in "long term capital appreciation", and liked to "buy back when the stock dropped". It's like a group of sirens on an island singing soothing sounds to value investors adrift at sea.

[bargainman]

Since it appears that Loews' mission in life is to trade below NAV, I'm thinking that the best way to play this would be to sell puts on it. The June 13 puts, with a strike of 40 are trading at 3.35. So essentially you're putting $40 at risk while being paid 3.35 = 8.4% return for about half a year if the option is not exercised....and you can keep rolling over...or am I missing something?

 

what you may be missing is that the stock is trading at 42.82.  that means the time value of the option is really closer to 0.50.  So the return is a lot less than what you wrote there.  If the stock dropped down to 40 then you'd be able to buy back at 0 but otherwise you'd have to buy it back at a higher price.  If that was your intention, that's ok, but the way you are calculating return is usually reserved for time value only.

[Palantir]

I don't understand. Why would I have to buy above 40?

[MYDemaray]

I don't understand. Why would I have to buy above 40?

 

I think bargainman is referring to buying back your naked put, whereas it sounds like you are selling an ITM put to get long the stock at a discount...

[thepupil]

Another somewhat unexciting year for Loews...

 

http://seekingalpha.com/article/1172491-loews-management-discusses-q4-2012-results-earnings-call-transcript?part=single

 

The opportunity cost of owning this stock keeps growing, but I always feel like they'll unlock value right when I sell. Anyone else getting impatient? (2.5 yr shareholder)

[biaggio]

Another somewhat unexciting year for Loews...

 

http://seekingalpha.com/article/1172491-loews-management-discusses-q4-2012-results-earnings-call-transcript?part=single

 

The opportunity cost of owning this stock keeps growing, but I always feel like they'll unlock value right when I sell. Anyone else getting impatient? (2.5 yr shareholder)

 

Not very exciting I agree.

 

Value is in Cash, CNA, and diamond offshore- Selling at a discount to BV which has not grown much at all the last 3 years

 

A hard market for insurance prices would help as would inflation - both are out of management control.

 

I like that they are holding cash ~ $3.9 billion + that management has significant skin in the game.

 

I am going to be patient for a bit longer- have held very small amount since ~ 2011.

 

[nwoodman]

Hmmm, at face value numbers are most uninspiring.  Loews historically has grown book value at around 10%.  This year they managed 5% after taking significant write downs on Highmount plus a hit from Sandy at CNA.

 

Book value at 31/12/2013  was $49.67.  The current share price is 43.51  so P/B is 0.88

 

 

There will be few P&C insurers that are not affected by Sandy so I see this hit as a bit of a wash and will only further harden the market. 

 

Good to see share repurchases ramping up again.  Shares out are 391.8m with a total of 5.6m shares repurchased during the year and 2.1m in Q4 alone

 

Not exciting but after such a large write down in Highmount,  the margin of safety is still good here IMHO as fair value is in the range 1.2-1.3x's book

 

 

Cheers

 

nwoodman

[Palantir]

Where is David Einhorn when you need him?  >:(

[nwoodman]

I bought them because they were "trading below IV", they had "owner operators" who believed in "long term capital appreciation", and liked to "buy back when the stock dropped". It's like a group of sirens on an island singing soothing sounds to value investors adrift at sea.

 

Somehow missed that quote, absolute gold! :)    Captures my experience perfectly.  I still think it is undervalued but can understand why people get frustrated with L as an investment.

[nwoodman]

Another AIG exec jumps ship. This time to Loews sub CNA

 

http://www.fortmilltimes.com/2013/04/26/2648355/cna-appoints-steve-marohn-western.html

[texual]

Did anyone read that comic? Methinks they are trying too hard.

 

Buy back stock, and quit telling anyone anything is my preferred strategy for L

[CorpRaider]

I watched the comic strip video thing.  Wonder what that cost? 

[CorpRaider]

April 29 (Reuters) - Hotel, energy and financial services conglomerate Loews Corp reported a 34 percent drop in first-quarter profit due to higher impairment charges and a sharp fall in investment income.

 

Net income at the company controlled by the billionaire Tisch family fell to $242 million, or 62 cents per share, from $367 million, or 92 cents per share, a year earlier.

 

The fall was mainly due to a sharp decline in the net investment income for the quarter to $5 million from $50 million a year earlier.

 

During the quarter, Loews also took an impairment charge of $92 million at its HighMount Exploration & Production unit related to the value of its natural gas and oil properties.

 

A year earlier, HighMount had impairment charges of $28 million.

 

Loews, which has interests ranging from insurance and luxury hotels to energy exploration and natural gas pipelines, said revenue remained largely flat at $3.73 billion.

 

Separately, Loews' largest holding, CNA Financial Corp , said operating income rose marginally to $231 million, or 86 cents per share, from $226 million, or 84 cents per share, a year earlier.

 

Analysts had expected CNA Financial to earn 71 cents per share, according to Thomson Reuters I/B/E/S.

 

Another unit, Diamond Offshore Drilling, which accounts for about a quarter of Loews's revenues, reported first-quarter results above analysts' expectations last week, helped by higher utilization of its deepwater units.

 

Loews's shares closed at $44.44 on the New York Stock Exchange on Friday.

 

http://www.reuters.com/article/2013/04/29/loewscorp-results-idUSL3N0DG1NC20130429?feedType=RSS&feedName=financialsSector&rpc=43

 

 

[CorpRaider]

Bloomberg is reporting that L is planning to issue over $500 million in 10 and 30 year bonds as early as today.  I thought they already had more cash than opportunities.

[fareastwarriors]

Loews Corp. (L), the New York-based conglomerate with holdings in insurance, energy and hotels, is planning to issue benchmark bonds in its first sale in more than eight years.

 

The holding company controlled by New York’s Tisch family may sell 10- and 30-year securities as soon as today, according to a person familiar with the offering. Proceeds may be used for general corporate purposes.

 

Benchmark sales are typically at least $500 million. The bonds may be rated A2 by Moody’s Investors Service.

 

 

 

http://www.bloomberg.com/news/2013-05-02/u-s-company-credit-swaps-fall-as-ecb-lowers-key-interest-rate.html

[Palantir]

buyback?

 

[thepupil]

$500MM 2023 at 2 5/8

$500MM 2043 at 4 1/8

 

Not enough for a substantial acquisition or  all out recapitalization but pretty cheap capital, nonetheless! Happy to see Loews finally take advantage of historic credit availability.

 

I think this will primarily be used to fund their hotel acquisition/renovation spree as well as some repurchases. I've yet to see any evidence the hotel capex is earning a high return, but will give them the benefit of the doubt, for now.

 

Since Highmount and Hotels don't produce a lot of cash/earnings and the market values them at 0, I do get a little worried about the two subs being a perpetual value sink. 

[Guest ajc]

"June 4 (Bloomberg) -- Jim Tisch, chief executive officer of Loews Corp., talks about the outlook for the U.S. economy, the company's investment portfolio and subsidiaries, and his efforts to minimize business worries at Loews. Tisch, speaking with Bloomberg's Stephanie Ruhle at the Bloomberg Link Hedge Funds Summit in New York, also discusses opportunities for growth at Loews and the outlook for the housing market."

 

http://www.bloomberg.com/video/loews-ceo-on-investing-business-strategy-economy-kJajN99GRHqvUCjNEfDXZQ.html

 

 

[thepupil]

If anyone cares or happens to still be riding this glacier with me, the current state of Loews SOTP :

 

CNA : 22.9/Share

DO  : 12.23/Share

BWP : 9.53/Share <----I am giving L credit for their BWP class B units converting to regular units this quarter

 

Loews PublicCo : $44.06 Per Share Value

Cash/Sec.        : $12.11/Share

Debt                : $-4.35

 

PublicCo + Net Cash and securities :  $51.81

 

What's left:

 

Boardwalk GP (see more info here : http://brooklyninvestor.blogspot.com/2013/03/more-adustment-to-loews-book-value.html)

Hotels (not much earnings or book value but they do own some trophy properties, namely the Loews Regency, which is easily worth $1MM/Key)

Highmount Natural Gas

[giofranchi]

Cna Financial started a Buy at Blair - 10:04 AM

•Cna Financial (CNA +0.8%) is popular all of a sudden, being initiated with a Buy rating at William Blair.

•Last week, Cna and parent Loews (L -0.2%) caught the eye of Deutsche's Josh Shanker who says - after years of underperformance - the companies are set to begin trading at valuations inline with their peer group.

 

 

giofranchi

 

[nwoodman]

If anyone cares or happens to still be riding this glacier with me, the current state of Loews SOTP :

 

CNA : 22.9/Share

DO  : 12.23/Share

BWP : 9.53/Share <----I am giving L credit for their BWP class B units converting to regular units this quarter

 

Loews PublicCo : $44.06 Per Share Value

Cash/Sec.        : $12.11/Share

Debt                : $-4.35

 

PublicCo + Net Cash and securities :  $51.81

 

What's left:

 

Boardwalk GP (see more info here : http://brooklyninvestor.blogspot.com/2013/03/more-adustment-to-loews-book-value.html)

Hotels (not much earnings or book value but they do own some trophy properties, namely the Loews Regency, which is easily worth $1MM/Key)

Highmount Natural Gas

 

 

Certainly has been a decent rise in CNA over the last few months compared to the parent stock price

 

http://tinyurl.com/mrbnbwq

 

 

Highmount right-offs have been an anchor, a revised focus on oil could limit further write offs.  It has been a rather torturous ride to date but I still think L can provide long term low double digit compounding from here and should be valued around 1.2-1.3x's book value or around $60+. Any less that that and Jim should be buying back hand over fist. 

 

Cheers

nwoodman

 

[thepupil]

Loews up 4.5% on good results at CNA and weak results at DO and BWP. Loews now trades w/i about  6% of the value of its net cash + publicly held subsidiaries. When the market rewards lower normalized (adjusting for impairments @ Highmount) earnings with a 4.5% increase in value, surely people are becoming more complacent and forgiving.

 

Loews now trades above book and looks less and less interesting as the increase in earnings power, intrinsic value, and book value has been very disappointing even when adjusting expectations for the large amount of cash these guys hold. 

 

Postscript: pre-market blip up 4.5% went away, flat on the day.

[dcollon]

Tisch Sees Rare Opportunity for Munis as Funds Dump Bonds

 

http://www.bloomberg.com/news/2013-11-18/tisch-sees-rare-opportunity-for-munis-as-funds-dump-bonds.html

 

[plato1976]

Not sure which one is more undervalued:

 

a high rating muni bond fund (like AA rated bonds)

or

a low rating muni bond fund (sth like PMF)

 

 

Tisch Sees Rare Opportunity for Munis as Funds Dump Bonds

 

http://www.bloomberg.com/news/2013-11-18/tisch-sees-rare-opportunity-for-munis-as-funds-dump-bonds.html