Leucadia National: Don’t Be Afraid of Companies Not Widely Followed

One of my favorite stocks, Leucadia National (LUK), reported earnings on Friday. If you’re not familiar with Leucadia, it’s basically the Greta Garbo of the stock market. The company has no analysts who follow it, no earnings estimates, no whisper numbers, barely any press releases and it does minimal volume.

Talk about bare bones, check out their website.

So what does Leucadia do? It’s often called a “mini Berkshire Hathaway (BRK.A)” because it’s a holding company that buys assets on the cheap. For nearly thirty years, the firm has been run by Ian Cumming and Joe Steinberg. They own a hodgepodge of businesses; some real estate here, some timber there, even a winery. Nothing terribly exciting.

But what is impressive is the stock’s long-term performance. Remarkably, Leucadia National has done even better than Berkshire Hathaway.

Since the stock market bottomed in August 1982, shares of Leucadia National are up over 32,600%. Berkshire is up only 29,600%. (Poor Warren.) Actually, LUK has done even better because it paid out an enormous dividend in 1999. The stock is up another 60% this year, and unlike Berkshire, they split the shares so normal humans can buy it.

The lesson here is, don’t be afraid of companies that aren’t widely followed. Some of the best stocks are off Wall Street’s radar screen. Inhabitants of Wall Streetistan tend to see all time and space as neatly divided into three month chunks. The quarterly earnings game is tough to play and there’s a benefit to ignoring it altogether.

Comments

[Wiki:]

Would have been better to include why Matrix Research has a Strong Sell on this one.

2007 Nov 14 02:45 AM

[Wiki:]

Would have been better to include why Matrix Research has a Strong Sell on this one.

2007 Nov 14 02:45 AM

[Wiki:]

Would have been better to include why Matrix Research has a Strong Sell on this one.

2007 Nov 14 02:45 AM

[Aquater:]

Strong sell?! Buy!! LUK is a buying opportunity for discerning investors. If you want quick kicks and want to be disappointed stay away from LUK.

2008 Mar 27 10:37 AM

[smash:]

I worked for this company for ten years. The top guys are financial phenoms. I wish the U.S. currency said it was backed by the full faith and credit of Leucadia because I would have a little more confidence in the dollar. This stock is never a sell - take it from a guy who made that very mistake a couple of times. Because the company absolutely shuns publicity and the top guys are not glory hounds, they never get caught up in the euphoria and subsequent blood bath of market bubbles. They do what others just talk about - buy when there is blood in the streets, sell when everyone in the world is buying. Their website - in all its spartan glory - says all you need to know about this company: Don't spend money that will not yield at least a 30% ROI.

2008 May 04 12:52 AM