Loews Corporation (L): Invest in This Conglomerate or Its Holdings?

Page 2 of 2

Hedge fund thoughts

At the end of 2012, there were a total of 24 hedge funds long Loews, a 20% increase from the third quarter. This includes the company’s top hedge fund owner by market value, Southeastern Asset Management, with a position close to $1.5 billion and making up 6.7% of its total 13F portfolio (check out Southeastern’s favorite stocks).

CNA had 14 hedgies long the stock going into 2013, which was an 8% increase from the third quarter. Its top hedge fund owner was Pine River Capital, holding a $19 million position in the stock, comprising 0.4% of its 13F portfolio (see Pine River’s high yielders).


Meanwhile, Diamond had some of the lowest interest, with 13 hedge funds long the stock, a 19% decrease from the third quarter. However, the top hedge fund owner was billionaire Jim Simons’ Renaissance Technologies, with a $103.8 million position in the stock
(check out Simons’ tech picks).

Don’t be fooled

All four companies (Loews Corporation (NYSE:L) and its three subsidiaries  have seen their stocks perform relatively inline with each other over the past 12 months.



The bottom line is whether there is any value-added by investing in Loews, or should investors simply invest in CNA, Diamond and Boardwalk on their own?

Based on the shares owned at the end of 2012, Loews currently owns approximately 89.9% of CNA, 50.4% of Diamond and 40.5% Boardwalk. Based on current market caps of these companies, Loews Corporation (NYSE:L) has a $16.5 billion ownership across the three companies compared to its own market cap of $17.8 billion. Thus, investors are getting the oil/gas exploration (HighMount) and hotel (Lowes Hotels) for a mere 1.9 times revenue.
Also, that’s assuming that the three publicly traded companies, Cna Financial Corp (NYSE:CNA), Diamond Offshore Drilling Inc (NYSE:DO) and Boardwalk Pipeline Partners, LP (NYSE:BWP), are fairly valued. Thus, I think investors should see nice returns over the long term by investing in Loews given its exposure to the relatively stable insurance industry and exposure to the fast-growing natural-gas industry, not to mention its hotel business.

The article Invest in This Conglomerate or Its Holdings? originally appeared on Fool.com and is written by Marshall Hargrave.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.




Page 2 of 2