Tags: Loews | diversified | stock | L

Loews: Diversified in One Stock

By Tim Plaehn   |   Tuesday, 01 Nov 2011 04:41 PM

Loews Corporation (L) is a holding company, the bulk of whose assets also are publicly traded companies. An investor thus can look at the share prices and financial results of the companies owned by Loews and determine a fair value for the holding stock. Aside from valuation, the range of businesses of the owned companies makes Loews a diversified investment in a single stock.

As for the company's assets, Loews owns 90 percent of insurance company CNA Financial (CNA), 50 percent of offshore drilling company Diamond Drilling (DO) and 60 percent of natural gas pipeline company Boardwalk Pipeline Partners (BWP).

Additional non-public assets include the general partnership of Boardwalk Pipeline Partners, 100 percent of natural gas driller HighMount Exploration & Production and the Loews chain of 18 luxury hotels.

For the third quarter of 2011, Loews reported net income of 40 cents per share compared to 9 cents earned in the same quarter of 2010. The recovery in income is attributed to a $328 million charge against CNA in 2010.

Net income from the CNA holdings was $84 million for the quarter, compared to a $140 million loss in the previous three months.

Valuing Loews

One way to determine a value for Loews is to add up the market value of the publicly traded shares, add in the cash and short term investment holdings and make an estimate for the value of the non-public assets.

At the end of the second quarter, the value of company's CNA, DO and BWP holdings was $15 billion. The company had about $4 billion in cash and investments for a total of $19 billion. On June 30, the market cap of Loews was $17 billion, well below the value of known holdings and without accounting for any value in the non-public assets.

Loews has traded at a significant discount to the asset value calculated in this manner since at least the recent financial crisis and ensuing bear market. During that period, CNA lost 85 percent of its market value and it seems the stock market has not been giving as much value to the Loews CNA holdings as the insurance company's share price indicates.

Investors looking at Loews must decide if the stock market will eventually get around to valuing the company at somewhere near the value of its holdings.

The company reports next at the end of January.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
Companies
Loews Corporation (L) is a holding company, the bulk of whose assets also are publicly traded companies. An investor thus can look at the share prices and financial results of the companies owned by Loews and determine a fair value for the holding stock. Aside from...
Loews,diversified,stock,L
397
2011-41-01
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved