Leucadia National Corp. (LUK): Is This a Baby Berkshire Hathaway Inc. (BRK.A) or Not?

Page 1 of 2

Leucadia National (LUK)Leucadia National Corp. (NYSE:LUK) has often been called a baby Berkshire Hathaway Inc. (NYSE:BRK.A). It does have many similarities to Berkshire and even has a 50-50 joint venture with them in the Berkadia Commercial Mortgage company. But where do the similarities end?

The Berkshire mini-me?

They are both diversified holding companies; they both have veteran investors as Chairmen, Ian Cumming and Warren Buffett. Both Buffett and Cumming write interesting, insightful and even entertaining Letters to Shareholders. Sometimes Cumming’s letters are laugh out loud funny.

Unlike Berkshire Hathaway Inc. (NYSE:BRK.A), Leucadia National Corp. (NYSE:LUK) is quite volatile as you can see from the chart, yet has outperformed Berkshire and the overall market. But when it goes down, it really goes down.

In one of those inimitable Letters to Shareholders, Cumming explains 2008, “In 2008, Leucadia reported a loss of $2,535,425,000 after tax, which is $11.00 per share fully diluted. In 1992, following a fire in Windsor Castle and marital problems for most of her children, the Queen of England in a speech marking the 40th anniversary of her Accession referred to the past year as ‘annus horribilis.’ 2008 was just such a year.”

BRK.B Total Return Price data by YCharts

Since that “annus horribilis,” Leucadia National Corp. (NYSE:LUK) has turned things around, increasing EPS from $0.10 in 2011 to $3.49 in 2012. With first quarter EPS of $1.10 it looks like they’ll top 2012. Total revenue for 2012 came in at $7.15 billion. At the end of the first quarter in 2013 it’s on track to surpass 2012 with revenue so far of $2.14 billion.

Leucadia offers a yield of 1.00% at a 12% payout ratio. (Berkshire has no yield) and has a five star CAPS rating. So does Berkshire. There the similarity ends. Leucadia National Corp. (NYSE:LUK) has one-twentieth the market cap of Berkshire at $9 billion to $262 billion. And Leucadia has a much smaller trailing P/E at 9.93 to Berkshire’s 16.75.

Leucadia, like Berkshire Hathaway Inc. (NYSE:BRK.A), has big hedge fund adherents; Bruce Berkowitz of Fairholme has been holding and adding to Leucadia National Corp. (NYSE:LUK) for a 5.15% stake in Leucadia. Keynote speaker Whitney Tilson again recommended Berkshire as a buy at the Value Investing Congress.

One reason hedge funds like both are their huge insider holds. Leucadia National Corp. (NYSE:LUK) Chairman Cumming owns 18,726,054 shares and CEO Richard Handler owns 11,184,168 shares. Warren Buffett owns 26,675,175 shares of the Berkshire A stock.

Another reason to like Leucadia is it is still trading below book as it has since 2011. Meanwhile, Berkshire Hathaway Inc. (NYSE:BRK.A) is trading significantly above book with Berkshire A shares closing above $168,000 on June 21 with book at $120,505.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!