-Diamond Offshore Drilling Inc. (NYSE: DO): 2nd largest publicly traded offshore drilling contractor after Transocean. Operates 47 offshore rigs.
-CNA Financial Corp. (NYSE: CNA): Struggling P&C insurer with underwriting history below the industry average.
-Boardwalk Pipeline Partners, LP. (NYSE: BWP): 3 natural gas pipeline systems extending from the South-West US to North-East US.
Non-Public Subsidiaries:
-Highmount: Natural gas production and exploration company with assets in Texas, Michigan, and Alabama.
-Loews’ Hotels: Luxury hotel chain operating 18 hotels in the US and 2 hotels in Canada.
The equity securities of Loews Corp are undervalued on a NAV basis. The shares are trading at a discount to their interest in their publicly traded subsidiaries. When you add in the fact that you are getting $12.16 per share of other assets for free, after subtracting parent company debt, the shares present a truly compelling value opportunity.
In addition, the value creation by this company's management over the past 50 years has been extraordinary. They have a long history of successful transactions (ex. Lorillard), which may continue into the future. They are self proclaimed value investors, and have shareholder interests in mind. Usually family managed conglomerates trade at discount to NAV because of shareholder unfriendliness, or dual share structures, but this should not be a problem in this scenario.
The company is also using cash to repurchase shares, and has a history of reducing outstanding shares by 25% in every one of the past 4 decades.
Investors could also play this trade by shorting out the market risk of the publicly traded shares.
See valuation below:
Have fun.
NOTE: No Holding. This is not an invitation or a recommendation to purchase securities. Please do your own research.
