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No. of Recommendations: 8
Random observations:

* Book value per share at 12/31/12 was $49.63. Tangible book was $47.09. Current price: $42.40. P/BV = 0.85. P/TBV = 0.90.

* Book value per share has grown at a 10.9% annualized rate from 2001 to 2012. Market value grew at 7.5% over that timeframe with the difference due to a contraction in P/B.

* As of today, Loews has a market capitalization of $16,623 milion. The market value of shares owned by Loews in CNA, BWP, and DO is worth $15,030 million. The difference of $1,593 million is what the market assigns to the Loews "stub" which is comprised of corporate cash/investments, Loews Hotels, Highmount, Boardwalk Pipeline B shares, and the Boardwalk Pipeline general partner interest. The tangible book value of the "stub" at 12/31/12 was $3,859 million which means that the market price of the "stub" is only 41% of book value.

* Loews operational results are distorted by impairments at HighMount due to low natural gas prices. These are non-cash and cannot be reversed in the event of a rise in natural gas prices.

* Track record and quality of management at Loews strongly supports a P/B of at least 1.0x and probably more like 1.1-1.2x. "But Loews always trades at a discount to book!" -- investors say! Not so. Year-end P/B was above 1.0 at 12/31/04, 12/31/05, 12/31/06, and 12/31/07. Year-end P/B was 1.55 at 12/31/07.

The market will probably keep Loews at a cheap price until the insurance industry attracts better valuations since CNA is a large reason for the discount to book. When this occurs is unknown but many conference calls this quarter suggest that the market may finally be hardening.
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