In today’s Daily Alert, Stealth Stocks Editor Dennis Slothower recommends a
diversified holding company (in the model of Warren Buffett’s Berkshire Hathway)
with a strong chart. The new recommendation is followed by a sell alert from The
Prudent Speculator.
“Leucadia National Corp. (LUK $31 NYSE) is a diversified holding company
engaged through its consolidated subsidiaries in a variety of businesses, including
beef processing, manufacturing, gaming entertainment, real estate activities,
medical product development and winery operations. The company also owns
approximately 28% of the outstanding common stock of Jefferies Group, a full-
service investment bank listed on the New York Stock Exchange. ... Shareholders’
equity has grown from a deficit of $7.6 million at December 31, 1978 (prior to the
acquisition of a controlling interest in the company by the company’s Chairman and
President), to a positive shareholders’ equity of $6.8 billion at December 31, 2012,
equal to a book value per common share of the company of -$0.04 at December 31,
1978, and $27.67 at December 31, 2012. (Source: SEC 10-K)
Why We Like It
“LUK has a strong balance sheet; the shareholder equity/total assets ($6.7 billion/
$9.4 billion) ratio stands at 0.71, meaning that every $1 of assets is backed by 71
cents of equity. Return on equity over the past 12 months is more than 13%. LUK
stock is also attractively priced, currently in the low $30 range. At these levels the
market is offering us a holding company — with a rock solid balance sheet, for a
below-market average P/E.”
Dennis Slothower, Stealth Stocks, May 2013