Susquehanna Initiates Coverage on Loews Corporation (L) with a Positive; Out-of-Favor Assets at an Outsized Discount

June 23, 2009 8:35 AM EDT

Susquehanna initiates coverage on Loews Corporation (NYSE: L) with a Positive rating. Price target $33.

Susquehanna analyst says, "Currently, shares of Loews are trading at a 33% discount to our net asset value (NAV) estimate of approximately $39 per share. As opposed to developing an opinion and target for each of Loews's publicly traded companies - CNA Financial (NYSE: CNA) (Not Covered), Diamond Offshore (NYSE: DO) (Not Covered), and Boardwalk Pipeline Partners (NYSE: BWP) (Not Covered), we incorporate the current market value of Loews's ownership interest in these companies as part of our estimate of NAV for Loews. We also estimate the value of Loews's non-public assets together with the net cash and investments at the holding company level in our estimate of net asset value. Shares of Loews are currently trading below the value of the company's publicly traded holdings, despite also having significant non-public assets. We refer to this situation as a negative stub, which means investors seeking to create a synthetic security, referred to as the Loews stub, by being long L and short the amount of CNA, DO, and BWP that Loews owns, can create the stub for a net credit."

To see more analyst ratings on L Click Here.

Loews Corporation is a holding company. The lines of business the Company’s subsidiaries are engaged in include commercial property and casualty insurance (CNA Financial Corporation (CNA), a 90%-owned subsidiary); operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc., a 50.4%-owned subsidiary); exploration, production and marketing of natural gas and natural gas liquids (HighMount Exploration & Production LLC, a wholly owned subsidiary); operation of interstate natural gas transmission pipeline systems (Boardwalk Pipeline Partners, LP, a 74%-owned subsidiary), and operation of hotels (Loews Hotels Holding Corporation, a wholly owned subsidiary).

Related Categories

New Coverage

Stocks Mentioned

Related Entities

• Susquehanna International Group of Companies

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?