ALLEGHANY CORP (Y)

[link01]

over ten years I care a lot about price performance. :)

 

Yes, however price performance of Y wasn't what I was referring to.

 

I was referring to whether management is beating themselves up for nothing when instead they could play golf.

 

The Alleghany management could have wound up it's operations ten years ago and instead put all of it's equity into Berkshire stock.  BV at Alleghany would have compounded at 8% annualized (Berkshire's stock price performance).  This despite the contraction of P/BV for Berkshire over the same period.  The "look through" performance of Alleghany would be far superior of course -- not only because the "look through" BV would have grown at 10%, but because IV grew even more.

 

This was even during a period when Berkshire's equities did relatively poorly (high valuations for the big blue chips).

 

This isn't to say that Y can't do better, but if their goal is 7% to 10% and they merely achieve that, I'll reassert that they are wasting their efforts.

 

y has had a policy of paying out a 10% stock dividend for yrs, so an adjustment is needed there.

also,going from admittedly hazy memory i believe they spun out chicago title yrs ago. and they may have spun out a portion of darwin insurance more recently as well before it was bought out in its entirety. y's long term return on their investment portfolio has been comparable to that of mkl.

 

this is not to argue that y has been much more than a solid if sleepy stock over the yrs. but there is a chance that y might have a much different looking future after their acquisition of transatlantic (big, maybe transformative) & the hire of joe brandon as pres of all their insurance co subs.

[Guest hellsten]

Here are a couple of charts that show the price of brk-b, y, mkl, wtm, wrb, l, bam, and luk from 1990:

http://investing.money.msn.com/investments/equity-charts?showchartbt=Redraw+chart&compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=1990&C7=1&C7D=1&C8=2013&C9=-1&CF=0&D7=&D6=&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

From 2000:

http://investing.money.msn.com/investments/equity-charts?showchartbt=Redraw+chart&compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=2000&C7=1&C7D=1&C8=2013&C9=-1&CF=0&D7=&D6=&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

1980 (LUK up ~40000%):

http://investing.money.msn.com/investments/equity-charts?compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=1980&C7=1&C7D=1&C8=2013&C9=-1&CF=0&D7=&D6=&showchartbt=Redraw+chart&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

1990-2000 (S&P 500 was on a roll. AFAIK even Seth Klarman lost out to the index):

http://investing.money.msn.com/investments/equity-charts?showchartbt=Redraw+chart&compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=1990&C7=1&C7D=1&C8=2000&C9=-1&CF=0&D7=&D6=&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

2000-2010 (S&P 500 goes nowhere):

http://investing.money.msn.com/investments/equity-charts?showchartbt=Redraw+chart&compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=2000&C7=1&C7D=1&C8=2010&C9=-1&CF=0&D7=&D6=&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

1995-2005 (WTM and MKL on a roll):

http://investing.money.msn.com/investments/equity-charts?showchartbt=Redraw+chart&compsyms=brk.b%2Cy%2Cmkl%2Cwtm%2Cwrb%2Cl%2Cbam&CB=1&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CP=1&C5=1&C5D=1&C6=1995&C7=1&C7D=1&C8=2005&C9=-1&CF=0&D7=&D6=&PT=7&symbol=us%3Aluk&SZ=2&nocookie=1

 

Would be interesting if the graphs showed book value instead of price. Would also be interesting to know how accurate the data is. I don't like charts… What I like is buying any of those companies below book value, preferably around 0.5 times book value  ;D

[Guest hellsten]

Weston Hicks talks about Alleghany's transformation at the 2013 Insurance Conference:

http://www.veracast.com/baml/insurance2013/main/player.cfm?eventName=2101_allegh

 

Talks briefly about non-insurance acquisitions:

 

- Bourn & Koch (80%) - machine tools and grinders

 

Bought in 2012 at slightly over 3 times EBITDA.

 

- Stranded Oil Resources (80%) - oil recovery

 

Acquiring legacy oil fields. Improving oil recovery…

 

- ORX Exploration (38%) - high impact oil and gas exploration

 

On-shore oil and gas exploration in Louisiana.

 

- Article One Partners (40%) - crowd-sourced patent validation

 

http://www.bloomberg.com/article/2012-10-17/a.RYt15yLzT4.html

[Guest hellsten]

Y so cheap:

http://brooklyninvestor.blogspot.com/2014/08/y-so-cheap.html