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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Roger L. Chuchen who wrote (6543)	4/2/1999 2:10:00 PM
From: Michael Burry	Respond to of 78652

The valuation of Loews is asset-based. They have several holdings which are already valued by the marketplace, such CNA and Diamond Offshore, which the market values at a current ~$6 billion. LTR now trades at $8.5 billion. I'd assume any sale would be around Diamond's true worth of around $3.5 billion and CNA's around $5 billion. So to me, you get the hotels, Bulova watch, Tisch investment prowess and Lorillard for free. Lorillard is the lowest cost-per-pack producer, and grew revenues 18% last year. It can generate half a billion in cash flow/year. So I'd say it's worth at the very least $4 billion (8XCF, MO is at around 14XCF). Basically, the market doesn't respect asset plays today. So my premise is that Lorillard has a positive present value. If one believes, as the market does currently, that Lorillard (which is the most profitable cigarette co on a per pack basis, with the fastest-growing premium brand) has a negative value, then LTR would not be as big a value. But it still would have a margin of safety from here. Loews today is denying all rumors. To me, CNA is large and a turnaround candidate in the right hands. Mike