They obviously think ACF and JEF are better values or they would not be selling LUK to buy these names. So, I believe they are selling cheap to by cheaper or why on earth do it?
Investing has a lot to do with finding undervalued companies, but a lot to do with market psychology also IMO. If you look @ LUK’s historical valuation you would think this company would be a lot higher. For the longest time LUK traded @ a premium because of the outstanding track record provided. C&S make a great team and are among the smartest investors in the world no doubt, but LUKs market premium is gone @ the moment, when people lose money stuff like this happens. When and will it return I dunno. Falling roughly 80% from there 2008 highs (46) to there 2009 lows (10), they really lost a lot of the LUK worshipers. LUK has lagged the market recovery significantly. There is 3 reasons for this IMO, the 1st reason they keep selling to buy other names (this is a turn off especially to me who looks @ what insiders buy daily and is a big part when making a decision to buy or not), secondly losing 80% made a lot of LUK die hards jump ship (premium gone, I believe losing 80% for a company like LUK or even Berkshire will take much longer to recover than most other companies because of the type of investors that were holding they are colt like and once they change there mind it is hard going back), thirdly they were overvalued @46 (LUK holders acting irrational buying @ these levels) . I think LUK is undervalued now and possibly a coiled spring, but I will only put a lot of my net worth in this company when value dries up elsewhere or they become cheaper. I was a die hard for many years, but will not have a significant amount of money with them @ this point. I once had 20% of my net worth tied up in LUK (When FAIRX had about 15% with them), but I do not feel comfortable with a lot of my money with them @ this point. I would prefer to buy what they are buying or buy something else @ the moment. I do not question they are undervalued @ the moment and will offer a nice return looking out a few years but there are lots to choose from and there is a chance they might continue there underperformance and I will get a chance latter on. |
