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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!