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8/13/2019 Value Investing grapich novel
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8/13/2019 Value Investing grapich novel
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At Loews, we seek to combine dynamic creativity and a
willingness to embrace constant change with a deep and abiding
commitment to long-established principles of prudent business
and investment management.
Our presentation of the Loews value story in graphic form may
surprise some of you. We chose this method of communication
because it has become increasingly difficult, in todays pure-play
business environment, for conglomerates like Loews to be heard.
We know we have a good story to tell, and we want to find a new
way to tell it this time in a unique and engaging way.
Since we never do anything halfway at Loews,
we asked Lotta Value to be our guide.
We hope you enjoy The Adventures of Lotta Value,
Investment Hunter ! We certainly had a lot of fun creating
her and sending her on her value quest.
The purpose of the following story of Lotta Value is to give the reader a broad unders tanding of the businesses and value-creation
goals of Loews Corporation and our subsidiaries. It does not tell the whole story; to get the full story, including a
discussion of the risks we face, you should read the annual, quarterly and other report s filed with the Securities and Exchange
Commission by Loews Corporation and its subsidiaries, CNA Financial Corporation, Diamond Offshore Drilling, Inc.,
and Boardwalk Pipeline Partners, LP. You can access these repor ts through the Investor Relations pages of our company websites at
www.loews.com, www.cna.com, www.diamondoffshore.com and www.bwpmlp.com, or through the SECs website at www.sec.gov.
8/13/2019 Value Investing grapich novel
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LOEWSSUB
SIDIARY
MANAGEME
NTPROFILE
S
LOEWS SHARE PRICE APPRECIATION
0
5
10
15
20
10 Years
Loews S&P 500
2 0 Y ea rs 3 0 Y ea rs 4 0 Y ea rs 5 0 Y ea rs
YOU GOTTA HELP ME HERE,LOTTA. I DONT KNOWWHICH WAY TO TURN ON
THIS LOEWS THING. I MEAN, IF YOU LOOK AT THELONG-TERM RETURN OFLOEWS COMMON STOCK,
ITS A NO-BRAINER
SOUNDS LIKE A GREATSTORY WHY NOT TAKEA POSITION IN LOEWS,
MR. STOCKMAN?
PLEASE LOTTA, CALL ME RICH.WELL, FOR ONE THING, LOEWS
IS A CONGLOMERATE.
AND? WHATSYOUR POINT?
CMON, LOTTA CONGLOMERATESARE SO 70S.
INSURANCE, OFFSHOREDRILLING, PIPELINES, OIL ANDGAS EXPLORATION AND HOTELS.
HOW CAN ALL THOSE FITUNDERNEATH ONE UMBRELLA?
LOOK, LOEWS EXECUTIVESKNOW HOW TO ALLOCATE
CAPITAL, BUT IS IT POSSIBLE TOMANAGE SO MANY DIFFERENT
BUSINESSES WELL?
MAYBE THEY ALL HAVELONG-TERM VALUE
GENERATIONPOTENTIAL, RICH.
WELL, HOWSTRONG IS
MANAGEMENTAT EACH
SUBSIDIARY?
THEYRE GREAT.TAKE A LOOK.
WHAT ELSE HAVEYOU FOUND OUT?
LOEWS HAS BEATEN THE S&P500 OVER THE LAST 50, 40, 30,
20 AND 10 YEARS.
I GET THEBEST TIPSFROM LOTTA.
I KNOW. MYPORTFOLIOIS DOING GREAT!
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Comparedt
o
$50.23
TOTAL
$48.08
NYSE:L
LoewsHotels
HighMount
BoardwalkPip
eline:
GeneralPa
rtner
ClassBun
its
SUMOFTHE
PARTS
Compare
dto$50
.23TOT
AL
$48.08
NYSE:L
LoewsHo
tels
HighMou
nt
Boardwa
lkPipel
ine:
Gener
alPartn
er
ClassB
units
SUMOFTHE
PARTS
WELL LOTTA, I KNOW THATLOEWS HAS ALMOST
$4 BILLION IN CASH ANDINVESTMENTS ON HAND.
RECENTLY THEIR SUBSIDIARIES HAVEDONE TUCK-IN ACQUISITIONS. BUT
THEYRE ALSO BIG INTO SHAREBUYBACKS. SINCE 1971 THEYVE
REDUCED THEIR SHARES OUTSTANDINGBY TWO-THIRDS.
LOOKS TO ME LIKE LOEWS STOCKTRADES AT A DISCOUNT TOTHE SUM OF THE PARTS.
CAN YOU EXPLAIN THAT, RICH?
LOTTA, OTHER THAN THEPROVERBIAL CONGLOMERATE
DISCOUNT, I REALLY HAVE NO IDEA.
DESPITE THE DISCOUNT, THE RETURN HASBEEN GOOD. A SINGLE DOLLAR INVESTED
IN LOEWS 50 YEARS AGO WITHALL DIVIDENDS REINVESTED IS WORTH
$1,500 TODAY! A DOLLAR INVESTED INTHE S&P INDEX GUESS HOW MUCH THAT
WOULD BE WORTH NOW.
AHH.
ONLY $32,LOTTA!
IT SEEMS LIKE YOU KNOWA LOT ABOUT LOEWS, RICH.WHAT HAVE YOU LEARNED?
$32 VS. $1,500. WOW, THATSIMPRESSIVE, RICH.
HMMMM. SO WHERE HAVETHEY BEEN PUTTING THEIR
MONEY LATELY?
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THESE GUYS PLAYTHEIR OWN GAME.THEYRE PATIENT
INVESTORS WHOLIKE TO BUILD ANDOWN BUSINESSESTHAT HAVE GOOD
CASH FLOW.
I DO, LOTTA!
RUMOR HAS IT THAT LOEWS KEEPS THEKEYS TO VALUE TUCKED AWAY IN VAULTS
AT EACH SUBSIDIARY. I NEED YOU TOFIND THOSE KEYS AND REPORT BACK
TO ME FAST.
VALUE VAULTS?THATS INTRIGUING!
OKAY, RICH YOURE ON. I
GUESS ITS TIMETO GET TO WORK.
THERES ONLY ONE WAY TOFIND REAL VALUE IN THIS
MARKET
AND YOU CANT DO IT SITTINGBEHIND A DESK
I DONT THINKYOU NEED MYHELP, RICH.
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CNA:
Improving its
underwriting
performance
CNA:
Working to close
its combined ratio
gap vs. its best
competitors
CNA:
Strong
position
specialty
lines
AHHH, CHICAGO: THAT TODDLIN TOWN. HMMM SEVENTH-LARGEST COMMERCIALPROPERTY & CASUALTYINSURANCE WRITER IN
THE U.S.
LOOKS LIKE CNAIS WORKING HARD
TO IMPROVEITS FINANCIAL
PERFORMANCE.
NOT SURE WHAT ILL FIND IN THEVALUE VAULT THAT WILL TOP THAT,
BUT A JOB IS A JOB.
GREAT VIEW! BUTWHERE IS THE OH!
HMMM, GUESS WELL BE GOING TO THE TOPTO GET TO THE BOTTOM OF THIS MYSTERY.
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Access Key
Needed!
More
Underwriting
Focus
Drive Down
Combined
Ratio
Generate
Premium
Growth
Maintain
Superior
Financial
Strength
HMMM
CNA IS SETTING UP FOR LONG-TERMGROWTH AND PROFITABILITY... UH OH,I THINK I HEAR SOMEONE COMING.
TIME TO FLY.
CHECK IN THE VAULT.SHE MAY HAVE GONE
IN THERE.
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KEEP FLEET
IN TIP-TOPSHAPE
DONT HAVE
STEEL LUST
SAFETY
FIRST
DONT
FOLLOWTHE CROWD
SATISFIED
CUSTOMER
IT COST LESS THAN YOU THINK.WE ARE ON A REBUILT VICTORY
CLASS HULL.
ITS A HULL WITH A VERY LONGLIFE AND DIAMOND HAS
REBUILT 9 OF THEM.
NOT UPDATE REBUILDCOMPLETELY, FROM THE HULL UP.
THEY COST ABOUT HALF OF ACOMPARABLE NEW RIG.
SO DOES CASH SAVED ACTUALLYGO TO THE SHAREHOLDERS?
LOTS OF IT. SINCE2006 WEVE RETURNEDABOUT $4.8 BILLIONTO SHAREHOLDERS
THROUGH DIVIDENDS.
I LIKE THE WAY YOU GUYS THINK. CANYOU KEEP ALL THESE RIGS BUSY? WELL, THANKS FOR ALL YOUR HELP.
MIND IF I TAKE A WALK AROUNDUNTIL MY PLANE IS REPAIRED?
SURE! THERES A LOTOF DEMAND IN THE
DRILLING MARKET FORDEEPWATER AND
ULTRA-DEEPWATER RIGS.
LOOKS LIKE DIAMONDS RIGGED FOR SUCCESS!
SURE. BUT WE DONT JUST BUY BECAUSE EVERYONE ELSE IS. WE ALWAYSASK OURSELVES WHAT ACTION WILL RETURN THE MOST TO SHAREHOLDERS?
IF THE ANSWER IS BUYING A NEW DRILLSHIP, THEN THATS WHAT WE DO.
SO YOU UPDATEOLD RIGS?
DO YOU EVERBUY NEW?
WHATS A VICTORYCLASS HULL?
DIAMONDVALUE
VAULT
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SAFETY
FIRSTDIVERSIFY LEVERAGE WHAT
YOUVE GOT
GET CLOSER
TO YOUR
END USER
SATISFIED
CUSTOMER
TIME TO HIT THE BOARDWALK!
BINGO! OVER THE LAST SEVERAL YEARS,BOARDWALK HAS MADE
PROGRESS ON ITS PLANS TO
GENERATE GROWTH BY LEVERAGINGITS CORE PIPELINE AND STORAGE
ASSETS, DIVERSIFYING ITSSERVICES AND EXPANDING ITS
GEOGRAPHIC FOOTPRINT.
NEED TO FIND THE KEYS,SO LETS THROW A LITTLELIGHT ON THE SUBJECT
GUESS IVE SEEN THE LIGHT, AS FAR AS BOARDWALK ISCONCERNED THEYRE REALLY COOKIN WITH GAS!
HMMMTHIS COMPRESSOR STATION WASPART OF THE HP STORAGE ACQUISITION,
ONE OF THE TWO ACQUISITIONS FOR WHICH
LOEWS PROVIDED BRIDGE FINANCING INORDER TO HELP BOARDWALK GROW.
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SAFETY
FIRST
SHORT-TERM
FOCUS ON OIL
PROVEN GAS RESERVES=
FUTURE VALUE
THE UNCONVENTIONAL
IS NOW CONVENTIONAL
HIGHMOUNT IS AN ENERGY E&P COMPANY, AND A DRILLER IN TWO OIL PLAYS IN THE U.S. THAT HAVE GARNERED A LOT OFINTEREST. ITS OPERATIONS EXTEND OVER 1.1 MILLION ACRES IN WEST TEXAS, THE TEXAS PANHANDLE AND OKLAHOMA.
HIGHMOUNT HAS HAD A ROUGH TIME THE LASTFEW YEARS BECAUSE OF LOW GAS PRICES.SINCE IT HASNT BEEN ECONOMIC TO DRILL
FOR GAS, THEYVE BEEN MOVING THEIRPRODUCTION EFFORTS TOWARD OIL AND GAS
LIQUIDS. OKAY, BUT WHERES THE
THIS LOOKS LIKE A GOODPLACE TO LOOK FOR THE
HIGHMOUNT VAULT.
WOW, NATURAL GAS-POWEREDTRUCKS ARE SO QUIET.
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Chicago
Nashville
Atlanta
NewOrleans
Miami
Orlando (3)Orlando
St.Pete
Beach
Tucson
SanDiego
SantaMonica
Hollywood
WashingtonD.C.
AnnapolisPhiladelphia
New York
Boston
QuebecCity
Montreal
Under Development
New Acquisitions
MapofLo
ewsHotels
&ResortsL
ocations
LOEWS HOTELSIS UP NEXT.
WHERE SHOULDI GO?
WHERE MIGHT THELOEWS HOTELS &RESORTS VALUE
VAULT BE LOCATED?
LOEWS HOTELS & RESORTS HAS BEEN FOCUSED ON BROADITS CUSTOMER BASE BY ADDING MORE GATEWAY CITIES ARESORT MARKETS, TRANSFORMING EXISTING PROPERTIE
THROUGH SIGNIFICANT CAPITAL INVESTMENTS AND IMPROVTHEIR PERFORMANCE AND PROFITABILITY.
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THAT NIGHT A FIGURE STREAKS ACROSS THE NEW YORKSKYLINE, DROPPING TO LOEWSS ROOFTOP.
HMMM BUT THERES STILL ONE PLACE I HAVENT LOOKED...LOEWS HEADQUARTERS. IF THERE REALLY IS A KEY TO LOEWSS
ONGOING VALUE-CREATION, THATS WHERE ILL FIND IT.
ADD MORE
GATEWAY
CITIES
EXPAND
CUSTOMER
BASEFOCUS ON
PROFITABILITY
TRANSFORM
EXISTING
PROPERTIESSATISFIED
CUSTOMER
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WELCOMEMS. VALUE.
RICH! WHATARE YOU
DOING HERE?
WEVE BEENEXPECTING YO
AND SINCE YOSUCH A GOODWERE GOING
YOU SEE TH
THERES NO SECRET TOHOW WE CREATE VALUE.WE JUST WANTED YOUTO BRING IT TO THE
FOREFRONT.
RICH HAS BEENWORKING FOR
US, LOTTA.
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667 Madison Avenue, New York, NY 10065-8087
www.loews.com