Time to wake up... engine is firing pretty well at LUK (not perfect, but good), price declining.Nearing 10x earning on my estimates of their run rate profits, debt upgrade, buybacks quite accretive here, downside scenarios seem minimal.I lightened up a bit over $27 (not a ton)... seems pretty attractive here.Happy hunting all.Ben
LUK is now selling below 2004 high and less than half 2008 high.Book Value / Share is flat over the last 5 years and management doesn't discuss it or emphasizes it in its performance metrics.Average Shares outstanding are flat over the last 4 years and are higher than in end-2013. So no significant share repurchases even substantially below book value.The previous management C & S pretty much squandered the financial meltdown opportunities chasing cigar butts and tax losses.It is now viewed as mostly a medium size, deeply cyclical (not too big to fail) investment bank with a few average, cyclical businesses. Without prospects of significant book value growth and double-digit ROE, it is doomed to trade at a significant discount to book value for the foreseeable future.Maybe it is a bargain now, even for a mediocre company. You can always hope.
The last 10 years have not been an easy time for people who like to buy cheap distressed assets, refinance them and fix them, and sell them at full value. They have muddled through unspectacularly, and have not succumbed to the temptation of offering high prices for mediocre assets, but it doesn't give them much to show for all their discipline. If there ever is a correction (of course, only a true permabear could even entertain the idea that stock prices will ever go down again), they should hold up pretty well, and we'll see if the new management is up to the challenge, but I suspect they will be. I nibbled at some more this morning, #3 position. They could close the store and sell the furniture for more than the current price.DTB
certainly agree:- historical book growth has been weak for a few reasons.- I don't like exec comp package at all.Still think it's far too cheap.
agree about comp. Handler & co. continue the rapacious Cummings/Steinberg tradition.btw, not that it matters, but LUK was my #4 holding (8%), not #3. It fell to #6 today because I bought back the Berkshire (#4) stake that I had sold down last month, and my Brookfield (#5) stake nipped in front too. dtb
With book value staying pretty flat, there are pretty strong indications that the business is mediocre. Then, even if it is selling for say 20% discount to intrinsic value I wonder sometime is it worth putting our money in it. After all, my rate of return is mostly going to be dictated by how much the business earn on an ongoing basis rather than closing this gap. Having said that, where do you all put the subsidiaries of LUK overall in terms of quality of business. I really don't like the asset management business and from what I can tell it has performed poorly even in such a benign market. Jeffries - highly cyclical and is probably considered much lower quality than other big powerhouses. Then the beef business, timber, Linkem etc. - all of them won't really make much difference in terms of what the company will earn overall. would love to hear thoughts here.SS
https://www.sec.gov/Archives/edgar/data/96223/00011931251811...Selling a good chunk of NB.Selling Garcadia.Vitesse doing a little buying.Renaming Co name to Jef.
Now 'officially' no longer the company i took a position in nearly 20 years ago.This makes my pulling the plug easier.What a waste of time and opportunity.
Often touted as the next BRK. Seems laughable in hindsight, given the cigar butts that they collected for their tax losses. Compare that to the quality of BRK’s subsidiaries.Now reduced to a deeply cyclical, midsize investment bank, doomed to trade below book.
It's interesting how negative the view is here on the boards/twitter that I frequent.it's kind of a head scratcher given that even mid-sized IB's don't generally trade below book very often (or now).I see the perspective of this not moving the direction some of us had hoped, but I still think there are many good things here at this price.Just idle musing I guess.
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