Jump to content

Companies that will allocate capital to the best source (even outside their biz)


Guest Bronco
 Share

Recommended Posts

Just trying to do a quick list...anyone feel free to add.  Maybe some commentary as well.

 

Heavyweight champ - BRK

Lightweight champ - Loews

 

Biglari

Codi

PICO

BAM BAM

MKL

GE

 

Left off some that are more narrow focused - i.e. Fairfax - mostly insurance, DHR - mostly manufacturing

 

Also, in the past someone mentioned a HK company and also a Canadian co. (Power).

 

Did I miss some?

 

 

 

Link to comment
Share on other sites

Why do so many people on this board like Lowe's so much? I'm picking a point in time, but I think it shows some things. For instance, from 06/30/1972 to 2000 (after a fairly good drop) the company performed about in line with the s&p 500. Now, since 2000, that's a whole different story. From what I can tell, it looks like the executive team is paid very, very well. They also use stock options.

 

To be up front, I know almost nothing about this comany, but, discounting the past 10 years, high pay, and stock options, I don't see why so many people like the stock. I appreciate your guys' opinions an hope you can educate me a bit more. Thanks!

Link to comment
Share on other sites

Why do so many people on this board like Lowe's so much? I'm picking a point in time, but I think it shows some things. For instance, from 06/30/1972 to 2000 (after a fairly good drop) the company performed about in line with the s&p 500. Now, since 2000, that's a whole different story. From what I can tell, it looks like the executive team is paid very, very well. They also use stock options.

 

To be up front, I know almost nothing about this comany, but, discounting the past 10 years, high pay, and stock options, I don't see why so many people like the stock. I appreciate your guys' opinions an hope you can educate me a bit more. Thanks!

 

If I didnt invest in companies with stock options or high CEO pay, my only holdings would be BRK and FFH. Not bad, but quite limiting.

 

I look at cash flow vs share price which tends to take into account pay. I dont overpay even if the company overpays its Management. Loews is good when its businesses are cheap. The double discount effect is very useful. All of the subs are cheap, and the parent is cheap creating a double discount / buying op. When energy picks back up you might want to lighten up a bit but for now its fairly cheap if you are bullish on oil and gas / and a turn around in CNA.

 

 

I would add FUR, LRE.

Link to comment
Share on other sites

Why do so many people on this board like Lowe's so much? I'm picking a point in time, but I think it shows some things. For instance, from 06/30/1972 to 2000 (after a fairly good drop) the company performed about in line with the s&p 500. Now, since 2000, that's a whole different story. From what I can tell, it looks like the executive team is paid very, very well. They also use stock options.

 

To be up front, I know almost nothing about this comany, but, discounting the past 10 years, high pay, and stock options, I don't see why so many people like the stock. I appreciate your guys' opinions an hope you can educate me a bit more. Thanks!

 

If I didnt invest in companies with stock options or high CEO pay, my only holdings would be BRK and FFH. Not bad, but quite limiting.

 

I look at cash flow vs share price which tends to take into account pay. I dont overpay even if the company overpays its Management. Loews is good when its businesses are cheap. The double discount effect is very useful. All of the subs are cheap, and the parent is cheap creating a double discount / buying op. When energy picks back up you might want to lighten up a bit but for now its fairly cheap if you are bullish on oil and gas / and a turn around in CNA.

 

 

I would add FUR, LRE.

 

Haha. That's why I love BRK and FFH, I guess

 

:)

Link to comment
Share on other sites

Stayley - I think you point out what may be a valid negative, but for me personally not enough to steer me away.  Loews has a great long term track record and in my opinion is a value play (it trades as a discount to fmv of assets). Remember, these guys are managing their mom's money - very conservative.

 

Even with the options scandal, apple was a clear buy at 100 and change.  Even a hundred million dollar salary shouldn't steer you from that situation. 

 

Buffett happens to have pitched a perfect game (or eight innings) as leader of brk.  Maybe loews will get you a 3-2 victory.

Link to comment
Share on other sites

One quick thing on Loews...and why I am a s/h

 

I think DO and BWP stake are worth $10B

I think CNA is worth $10B.

 

Net Cash of 3.5B - 4B

 

I think Highmount is worth $2B

 

$26B (just my opinion) of value - $15B+ in market cap.

 

Diamond Offshore should really rebound after the drilling moratorium, but we'll see.

CNA is transforming itself...again, a WIP. 

 

But the margin of safety is both  the huge cash position and the discount to FMV of assets.

Link to comment
Share on other sites

Scorpion - not mentioned by mistake.  Don't have a position now, but have in the past.

 

They will have a lot of capital soon from Americredit.

 

 

 

On issue of Loews - always trading at a discount.  Maybe valid.  Something to think about. 

 

Would Buffett not buy a stock b/c it always trades at a discount, or would Buffett buy a stock because it always trades at a discount?  I kind of take the philosophy that I own a % of the business, so I look to the underlying business for valuation purposes.  But that is me, and I am not always right (ask my wife and replace "not always" with "never"!)

Link to comment
Share on other sites

Hahaha bronco!

 

I see value in Loews cause i like the long term trend of there companies. Loews is not exactly an unknown company so if the past and the present hasnt shown a valuation where  Loews is not trading at a discount. I wouldnt base my thesis on no discount in the future. The long term trend of there companies is a massive +.  In the future most likely there will be still a discount but, it shouldnt matter cause there companies are in the right sector.

 

 

More companies:

GLRE

CET

 

 

Link to comment
Share on other sites

List so far...(maybe next we rank and beat these up)

 

BRK

Loews

Biglari

Codi

PICO

BAM

MKL

GE

Groupe Bruxelles Lambert/Pargesa/Power Corp of Canada

Investor AB

Jardine Matheson

Oresund

Investment AB Kinnesik

GLRE

CET

LUK

FUR

LRE

Hallmark Financial

Mass Financial Corp.

 

 

 

Link to comment
Share on other sites

Groupe Bruxelles Lambert/Pargesa/Power Corp of Canada

Investor AB

Jardine Matheson

Oresund

Investment AB Kinnesik

 

I'm sure we can get a larger list going...

Investor is a really bad example, since they are hardly even actively managing their portfolio. Even if you would argue that they do, they are still overpaying their corrupt executives for making the "active" decision of holding on to companies of which they have been the majority shareholder for decades. I'm actually quite disgusted by Investor and the Wallenberg heirs.

Link to comment
Share on other sites

BRK

Loews

Biglari

Codi

PICO

BAM

MKL

GE

Groupe Bruxelles Lambert/Pargesa/Power Corp of Canada

Investor AB

Jardine Matheson

Oresund

Investment AB Kinnesik

GLRE

CET

LUK

FUR

LRE

Hallmark Financial

Mass Financial Corp.

 

Some good names in this list, some I am not so sure (GE is all over the place but its capital allocation does not make sense to me.  PICO management is grossly overpaid and has relatively poor results LT,  Biglari why do we care about him in this forum..., LRE is definitely focused on a single type of business).

 

I think a better question would be who has made 20% for their shareholders on a dozen years or more.  Then the list becomes much much smaller...  In addition to some names on the list, Danaher comes to mind.

Link to comment
Share on other sites

 

Investor is a really bad example, since they are hardly even actively managing their portfolio. Even if you would argue that they do, they are still overpaying their corrupt executives for making the "active" decision of holding on to companies of which they have been the majority shareholder for decades. I'm actually quite disgusted by Investor and the Wallenberg heirs.

 

I don't know that I necessarily agree that it is such a "really bad example," of a company that invests where its sees the best opportunities. The company has to manage its cash flow each year, choose whether it is going to invest in its holding companies, retain capital, etc., and the fact is, even if their execs are overpaid (name 10 execs who aren't today), the returns over time speak for themselves (See the attached chart of preformance versus the S&P 500).

 

I'm not saying invest in any price, but it is a Holding Co. that invests in several different industries and that has beat the market over time.  

 

Link to comment
Share on other sites

I don't know that I necessarily agree that it is such a "really bad example," of a company that invests where its sees the best opportunities. The company has to manage its cash flow each year, choose whether it is going to invest in its holding companies, retain capital, etc., and the fact is, even if their execs are overpaid (name 10 execs who aren't today), the returns over time speak for themselves (See the attached chart of preformance versus the S&P 500).

 

I'm not saying invest in any price, but it is a Holding Co. that invests in several different industries and that has beat the market over time.

 

Surely, benchmarking against the S&P 500 is highly inadequate since the Swedish stock market has performed alot better than the American lately? 10 year graph versus OMXSPI tells a whole other story.

http://img837.imageshack.us/f/investor.jpg

 

In my view they are no better than closet index funds, which their core holdings coupled with their track record confirms.

Link to comment
Share on other sites

I think these list can be problematic. I think they generate a list of anyone with a good shareholder letter and an ok record. I think it would be more useful to have a list of owner managers with a rule that you can only post 2-3 names, and you have to post a thesis paragraph explaining why its a good investment for the next 5 years.

 

I would post L, FUR, LRE.

Link to comment
Share on other sites

I dont think Loews has ever traded equal to its parts. They always have a discount.

 

Very true, which is why you need a double discount to really consider buying.

 

But they also have a very long habit of buying back shares.  Which is exactly what you want a company to do if they are constantly selling at a discount. it's basically a guaranteed return.  The only downside of course is that they are going to have a hard time growing.  But they won't have a hard time growing value per share which is probably what everyone on this board wants!

Link to comment
Share on other sites

Myth - to be be blunt, i am expecting my second child any day now.  I like your idea...why don't you run with it.  Get users to post their top 1 or 2 ideas of best capital allocators, and why or why not they are good values right now.  May help narrow down the list.

 

After all this is a board named after great capital allocators.  Why not mention the other ones?

 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...