I have been a long term holder of LUK and it is by far my largest holding. I have increased my holdings significantly over the past 12 months under $25. There is a lot of negativity because it has not been a good ride for quite some time.
I think the time for LUK is now and you will do very well to get long now. I will go over the catalysts below:
JEF has been inconsistent but folks need to remembder JEF's size has doubled since the financial crisis and I think it will just take time to get the performance and expenses normalized. It takes years to develop relationships, etc. JEF has a lot of upside because they are not classified as a bank by the Fed so they an be more aggressive. Once normalized, on average and over time I expect JEF to produce $300M in net income annually from normal operations. Add another $50MM or so for rescue deals or investments such as KCG, FXM, HRG, etc.
Berkadia - this JV with BRK has a lot of room to grow. They recently added to their ivestment sales group and appointed Justin Wheeler (COO of LUK) as CEO to show the importance of this group. It will take a couple of years but i expect this group on average and time to generate about $50M in net income anually.
Buybacks - this is not priced into the market and I am going out on a limb here - I think LUK will start to buyback stock at these levels. We saw very little buyback in Q4 for the first time since I can remember. They have authority to puchase up to 25MM shares ($500MM) - I think they like the investments they have made and are committed to growing them and with asset prices where they are buybacks are very attractive. They have plenty of cash to do this.
So normalized p/e of 20x (throw in Conwed, etc) with buybacks and hidden value in Linkem, HOFD, etc. There is a lot to like. Hopefully it won't take too long for them to unlock and execute.
Long time MPEL holder - bought at an average of 8-9 in mid-late 2000s - sold half of my position in low-mid 30s. Over the past few months I am back to a full position. Added today under $21 and sold $21 puts.
This looks very compelling here although this could go lower as the market can get very irrational and the Chinese gov't is hard to predict. I like MPEL here due to the following:
1. Near term catalysts: 1) Manilla operating results for Q1 & Q2 - hopefully they are good; 2)Studio City looks very compelling and will be delivered Q3; 3) FCF generation is good and will be excellent by year end 2015 - barring a total implosion of Macau expect very large buybacks; 4) leverage is managable; 5) operating leverage - available with future phases to Manilla, Studio City, Tower 5 COD, retail COD, etc.
I am not saying its easy here as this is a falling knife, but if you have a long term horizon (and I don't mean 5 years, I mean like 2 years) you should do very well here.
Matermind - I would be interested in your thoughts if you have time to re-write the post.
I read through it and nothing really jumped out at me. The large operating businesses including JEF and Nat'l Beef just seem to be limping along - perhaps some improvement in 2015, but doesn't appear to be anything big. Commented slow Q1 for JEF in 2015.
The FXCM deal appears to be on the right track - this along with KCG and HRG is where Handler has been at his best.
LUK Asset Mgmt - appears to be a big focus and is getting a lot investment. Early, but I am hopeful here - a bit concerned about where we are in the cycle short term, but I could see this doing well over time and cash flow from asset mgmt is very predictable which LUK needs.
Thats about it - there were some special charges in this quarter, but basically LUK is trading at a 20-25x P/E and under book value. I think there is some upside here. I would really like it if they continue to buy back shares - I think thats a good use of capital here as other assets seem pricey while LUK appears cheap.