LUK below $20 ?

[elltel]

anyone interested??

[shalab]

There is other cheap stuff going around. BRKA/BRKB is one to start with.

 

 

[kapilm]

I bought some at $20. Its a solid company with good track record.

 

[Myth465]

I was about to make this post. I am getting slightly interested, but would like it to fall  a bit further.

[StubbleJumper]

There is other cheap stuff going around. BRKA/BRKB is one to start with.

 

 

 

 

Yep, I topped up my BRK.B holding at $70 yesterday.  Didn't add much, but I couldn't resist taking another nibble.

 

SJ

[scorpioncapital]

I think LUK is extraordinarily cheap, selling perhaps 1/2 of intrinsic value. Give it time.

 

 

[bargainman]

I think LUK is extraordinarily cheap, selling perhaps 1/2 of intrinsic value. Give it time.

 

 

 

Based on what IV calculation?  They're trading a bit higher than book value, although I'm not sure what to make of book value given the large NOL presence.

[Guest Bronco]

I like berkshire's businesses and capital structure much better.  That being said, everything is relative to it's price.  But I vote brk at these levels.

[Myth465]

I thought the NOLs were written off. What do you make of the new Aussie miners tax, LUK said it hurts but the mining company should still be very profitable.

[scorpioncapital]

How can you guys think that a $180 billion market cap company can possibly produce a return as good as a $5 billion one? Berkshire needs to create nearly $200 billion in market cap for your stock to double, Leucadia only needs to generate $5 billion or 3% of that. Being loyal to Berkshire is one thing, but stop and think about the kind of market gains you need.

[Myth465]

How can you guys think that a $180 billion market cap company can possibly produce a return as good as a $5 billion one? Berkshire needs to create nearly $200 billion in market cap for your stock to double, Leucadia only needs to generate $5 billion or 3% of that. Being loyal to Berkshire is one thing, but stop and think about the kind of market gains you need.

 

This has and continues to be my biggest problem with Berkshire. I think its a great store of wealth though. The problem is I don't have much of it, still in the building phase.

[vinod1]

How can you guys think that a $180 billion market cap company can possibly produce a return as good as a $5 billion one? Berkshire needs to create nearly $200 billion in market cap for your stock to double, Leucadia only needs to generate $5 billion or 3% of that. Being loyal to Berkshire is one thing, but stop and think about the kind of market gains you need.

 

Both have different risk/return profiles but problem I am having with LUK is more around trying to nail down its IV at something other than its adjusted book value. LUK's value can vary quite a bit based on how you estimate the IV of NOL and Fortescue (stock and the 4% revenue note). I just am not able to get a good handle on these two items. Do you have any suggestions on this?

 

Thanks

 

Vinod

[bargainman]

I thought the NOLs were written off. What do you make of the new Aussie miners tax, LUK said it hurts but the mining company should still be very profitable.

 

Yes I think you're right about the NOLs.  For some reason I thought they had recognized them once again, but that's not the case after a quick read of the 10Q and annual letter.  That said, it's still an asset going forward if they can use it.  I think it lasts till 2030 so my guess is they'll get some use out of it.  So, the question is do you use that in the IV calculation?

[bargainman]

Both have different risk/return profiles but problem I am having with LUK is more around trying to nail down its IV at something other than its adjusted book value. LUK's value can vary quite a bit based on how you estimate the IV of NOL and Fortescue (stock and the 4% revenue note). I just am not able to get a good handle on these two items. Do you have any suggestions on this?

 

Thanks

 

Vinod

 

Yes that's the thing.  You can use book value + some portion of NOLs, but since the underlying securities fluctuate, there's that volatility.  On the earnings and cash flow side I have a tough time evaluating it too..  Then there is also the presumed investment prowess of Ian and Joseph (and the risk that they leave). Which is why I was asking how others are evaluating IV?

[scorpioncapital]

A portion of the NOL's came back ON the balance sheet in 2009 so you can't add in the full amount that was taken off, that would be double counting.

 

 

[scorpioncapital]

"On the NOL, it is very likely they'll be able to use at least a portion of it against their stake in Fortescue and other relevant capital gains... so I would net it against the DTL that they have there"

 

Not for Fortescue you can't do that - it is not an associated company and its gains run through comprehensive income similar to unrealized gains in insurance companies - the tax not paid is already included in this account. There is no "hidden" value in tax not paid on their mining investments.

[scorpioncapital]

you got it :) However you have to add the tax saved to the gains in Jefferies and Americredit, this is my understanding.