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Luis Hernandez

Luis Hernandez
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  • Leucadia Poised To Continue Strong Long-Term Returns [View article]
    I guess that is one of the benefits of being a project within Leucadia. The LNG projects will turn out fine, we just have to be patient. These export terminals have to be approved eventually and when they are finally build they will be great cash cows to Leucadia. The business will allow for ample long-term leverage at low rates.
    Jun 4 01:55 PM | Likes Like |Link to Comment
  • Leucadia Poised To Continue Strong Long-Term Returns [View article]
    I think it is highly unlikely the Leucadia will turn into Loews. They are very different in their approach and in their abilities. I think the guys at Loews are less competent than expected and they haven't done a thing since the financial crisis. They basically froze and don't create much value year after year. They could at least repurchase their own shares. CNA Financial is about 60% of their assets and it earns a mediocre ROE and when it was cheap they didn't repurchase shares (they owned 90% of it, so not many options). Their investing abilities at CNA are incompetent (all bonds) and basically it is a big drag on everything else.

    Leucadia on the other hand has many businesses with value creation potential and have just finished getting rid of all the "legacy" investments/businesses that they don't consider will produce much value in the future.
    May 23 02:48 PM | 3 Likes Like |Link to Comment
  • The Hallmarks Of A Value Investment [View article]
    You are welcome. What is your newsletter?
    Apr 29 06:02 PM | Likes Like |Link to Comment
  • The Hallmarks Of A Value Investment [View article]
    This company has a tangible book value of $9,00 per share. The 10Y track record in BVPS growth is 10% per year. This includes 3-4 years of treading water in BVPS growth given insurance losses in the Personal Lines business. This is in runoff and the company had a combined ratio of around 101% in 2013. Before this "adventure" in Personal Lines, the company had a great underwriting track record, and the 10Y record is below 100% (combined ratio).
    I expect the BVPS growth over the next 5-10 years to be at least 12%. This means around 16,5% TBVPS growth. Right now the company trades at 93% of tangible book. If my number above proves right, we are looking at an implied yield of around 17,7%. This estimate doesn´t assume that the stock trades at BV in the future, this is just from the internal growth and assuming the current P/B ratio maintains. The current P/B is 68%.

    Luis Hernandez
    Apr 28 10:15 AM | Likes Like |Link to Comment
  • Liberty Media's Announced Plans Are A Good News For Sirius Investors [View article]
    Excellent article and analysis!

    I still cannot get comfortable with SIRI´s valuation (18.8x P/FCF), so I can´t buy it at current prices.

    I do like LMCA and lets hope the price comes down. I think the restructuring will create value.
    Mar 20 04:38 PM | Likes Like |Link to Comment
  • J.C. Penney: Who Should You Believe, The Bulls Or The Bears? [View article]
    Again a great article!
    Feb 12 01:12 PM | Likes Like |Link to Comment
  • Leucadia Poised To Continue Strong Long-Term Returns [View article]
    Who is Wayne Rodgers?
    Feb 3 04:49 PM | Likes Like |Link to Comment
  • Creating J.C. Penney At 2-3x EBITDA [View article]
    Good article Dante, as always.
    Jan 29 04:33 PM | 1 Like Like |Link to Comment
  • Berkshire Hathaway: Shooting Dead Fish In A Drained Barrel [View article]
    Great article! The earning power of Berkshire is explained and calculated very well. Agree completely with the comment on the 13x multiple being low, which I actually think is a bit too low. I can confidently value these businesses with an 18x multiple.

    The comment from Ravi is exactly right. I guess Christopher didn´t mean the current 1,2x BV price as a "guaranteed downside protection point" that never changes. I agree with the idea that the 1,2x BV is a great downside protection that will also fluctuate quarter to quarter. The important thing is that over time you will not lose money if you buy at the current BV multiple (around 1,3x). Either the multiple will expand or the 1,2x BV point will catch up with you and resume price increases along with the BV growth. Obviously I am talking about "over an extended period of time" in order for it to work in a "guaranteed way".
    Jan 20 09:45 AM | 1 Like Like |Link to Comment
  • A Sale Is Going On At Sears Hometown And Outlet Stores [View article]
    Great article!

    I believe ESL no longer owns 48% of the business (it used to be close to 60%). A couple of sources show a current 25% ownership. ESL probably had to distribute shares for redemptions.

    This sure has been a huge price drop from the highs. The business trades at 8x FCF ($22,00) which I believe its cheap but not a bargain yet. The share repurchase history of Eddie Lampert is definitely something relevant along with the revenue growth potential and margin expansion. The spin-off was done through a rights offering and the price to pay by SHLD shareholders was $15,00 which was supposed to be a REAL bargain. I think the current price is awfully close to this price.

    Luis Hernandez
    Jan 10 11:17 AM | Likes Like |Link to Comment
  • Pulse Seismic: Year End Update [View article]
    Good article! This is a great business with a bright future.
    Dec 23 10:21 AM | Likes Like |Link to Comment
  • Does The Best Brookfield Come In A Small Box? [View article]
    BAM will compound equity and intrinsic value at around 12%-15% over the long term. In order to obtain those results (or more) as an investor, you must buy the stock when it is undervalued. I would say that point right now would be around $30. That means that right now its not a good time to buy BAM, but if you bought cheap you can hold it (depending on your capital available and opportunities).

    Luis Hernandez
    Oct 2 03:14 PM | Likes Like |Link to Comment
  • Does The Best Brookfield Come In A Small Box? [View article]
    The problem is that the BPY shares will be issued way below BV (assuming the price stays the same as now at the time of the issuance). If the price of BPY goes up, less shares will have to be issued, the discount to BV will be lower, therefore there will be less dilution for BPY shareholders. I hope that is the case.
    Oct 2 10:18 AM | Likes Like |Link to Comment
  • Does The Best Brookfield Come In A Small Box? [View article]
    Have you calculated BPY´s BV/share post merger with BPO?

    My calculation gives me $24,42 per share for BPY, assuming they issue the entire 174 million shares. The less they issue the better (obviously). The current BV/share is $25,64, therefore there is dilution to BPY´s shareholders. I guess the discount to the price paid for BPO is enough and they estimate the dilution creates value.

    Luis Hernandez
    Oct 1 12:59 PM | Likes Like |Link to Comment
  • Brookfield Office Properties Is An Out Of Favor Real Estate Play [View article]
    The deal is good for BPO and not sure how good for BPY. It will reduce BPY´s book value per share from $25,64 to around $24,42.
    The good thing is that now it will all be consolidated into BPY and it will be a more efficient operation (cash flows, taxes, only 1 public entity, etc.). BPY will become easier to understand I guess.
    Oct 1 11:04 AM | 2 Likes Like |Link to Comment