dfcanuck Posted February 4, 2009 Posted February 4, 2009 around the $10 range... also looking at Methanex at current $ range. Still like SFK.un and CFP.un Coal companies getting interesting at current levels, such as Grande Cache and PCX-N. And fairfax is into coal (ICO) as we all know.
Stove Posted February 4, 2009 Posted February 4, 2009 $10 sounds good for LUK. Grande Cache is trading for their net cash right now, capex for FY10 will be $50, which means they'll still have $.31/share in cash at the end of the year. Their fiscal fourth quarter will look brutal due to coal contract deferrals but once they work through that they should be sitting pretty. However they seem to enjoy raising their cost and lowering their production estimates every quarter like clockwork
scorpioncapital Posted February 5, 2009 Posted February 5, 2009 While I'd love to buy LUK at $10, I am not at all certain it will ever get there. At $10, it would trade (and this is my opinion of adjusted values) somewhere between 33%-50% of book. That seems preposterously low unless this is the Great Depression v2.0
dfcanuck Posted February 5, 2009 Author Posted February 5, 2009 I believe $10 for LUK is entirely possible, given the poor performance of some of their holdings lately. I didn't think I'd see GE at $10, or BAC/Citi at $5 either. This whole sector, such as Clarke and Brookfield, are realizing asset & goodwill writedowns, and, I believe a basket of these will do well once we see a bottoming in commodity and house prices, which I predict will be around Q3/09. I'll be watching some technicals this summer, because I believe there will be some 4-baggers by 2012 in many names.
scorpioncapital Posted February 5, 2009 Posted February 5, 2009 My reasoning goes like this: I think the odds of hitting $10 is about 1/3. The odds of staying around $15 is about 2/3. So the expected buy price should be $13.20/share. Since I'm an optimist, my buy order is in at $14 :)
indirect Posted February 5, 2009 Posted February 5, 2009 Why don't you write a 15 put feb19 for 1.1 for a effective price of 13.9?
summer Posted February 5, 2009 Posted February 5, 2009 Hello all, Nice job with the site. I have some GACHF which I figure will be wallpaper for a few years unless China buys them out, not totally unlikely?? what I don't get is the love affair so many have with LUK? would anyone be willing to share their reasoning? I feel like I am missing something that is staring at me and I just can't get it. ???
scorpioncapital Posted February 5, 2009 Posted February 5, 2009 How do these puts work? You get $110 for every contract and if the stock is below $15 before Feb 19 (say $14.75) you may be excercised and must buy 100 shares ($1475) - $110 = $1375 or $13.75/share? If you are not exercised or the stock is above $15 you get to keep the $110? Are there any collateral requirements? To the poster about Leucadia - The main feature I like about it is that the managers of the company truly understand capital allocation, investing, and accounting. I mean, in a very deep and creative way, similar to Warren Buffet. You are not buying a great business with a big moat like say Walmart or Procter and Gamble, it's a totally different thing - BUT, the end goal is similar, to compound a particular sum of money at certain desired rates and try to stay out of trouble and making foolish business decisions. For the last decade or so, the company has sold at a premium to book, one having to believe the growth rate and management were worth that premium. Today, with the crisis, I believe LUK is selling at or slighly below a conservative estimate of book value so you don't pay extra for the growth rate and management.
Stove Posted February 5, 2009 Posted February 5, 2009 LUK is invested $200mm in Pershing Square IV, which is an Ackman vehicle with the sole purpose of investing in Target at 2 times leverage. I don't get this at all and would love to hear why it is a good idea. Why not just invest in the stock itself? Paying a fee to have someone else buy the stock with leverage does not seem like good capital allocation. is there a tax issue that makes this worthwhile? does pershing have a lower cost of capital that negates the fees?
Stove Posted February 5, 2009 Posted February 5, 2009 I just looked at the Pershing presentation linked on a different post, and I see PS IV has suspended their management and incentive fees...better late then never
scorpioncapital Posted February 5, 2009 Posted February 5, 2009 They did say at the last Leucadia AGM that Ackman was kind of impulsive, maybe this is an example of that.
Alekbaylee Posted March 2, 2009 Posted March 2, 2009 around the $10 range... also looking at Methanex at current $ range. Still like SFK.un and CFP.un Coal companies getting interesting at current levels, such as Grande Cache and PCX-N. And fairfax is into coal (ICO) as we all know. You may well be close to your bid...
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