Tags: value | Leucadia | National | LUK

Still Value in Leucadia National’s Assets?

By    |   Monday, 21 Nov 2011 05:16 PM

Diversified holding company Leucadia National (LUK) has a long term record of above average returns to investors. Since the financial crisis and recession which started in 2008, however, this stock has not provided the growth rates of previous years. Investors considering this stock must decide if there is still value in the assets accumulated by the management team.

Leucadia National owns a highly diversified mix of assets, including wineries and pharmaceutical manufacturing companies. Among the larger holdings is a significant investment in Australian mining company Fortescue Metals Group, Canadian mining company Inmet Mining and an associated Spanish copper mine, and investment banking company Jefferies Group (JEF). Also in the holdings are real estate and energy production assets plus a couple of manufacturing companies.

The investment and management decisions of Leucadia are made by Chairman Ian M. Cumming and President Joseph S. Steinberg, who founded the company in 1978. The company assets of Leucadia National are used by these two gentlemen to invest in the value and special situations investments they believe will give the best long term returns.

Long term results

Leucadia National does not provide the typical corporate quarterly earnings news releases and conference calls. Financial data is posted by links to the SEC-required quarterly 10-Q and annual 10-K forms. The company does not issue news releases.

Outside of the financial data on these reports, the only analysis provided is an annual letter from the founders, included in the annual report covering the previous year's results, and their thoughts on the various investments.

The investment returns of Leucadia over the long term have far exceeded the overall market. From 1979 through 2010, LUK provided investors an average compounded annual return of more than 20 percent. In the same period, the S&P 500 returned just over 8 percent per year.

Leucadia’s returns have come with a significant amount of volatility. In the period from 2000 through 2010, annual share price returns ranged from a loss of 65 percent in 2008 to a 67 percent gain in 2007. The share price gained 19 percent or better in 8 of those 11 years.

Leucadia is not often given ratings by Wall Street analysts. The company reports next on Feb. 25.

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Diversified holding company Leucadia National (LUK) has a long term record of above average returns to investors. Since the financial crisis and recession which started in 2008, however, this stock has not provided the growth rates of previous years. Investors considering...
value,Leucadia,National,LUK
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2011-16-21
Monday, 21 Nov 2011 05:16 PM
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