A Look at Loews

04/28/2017 2:50 am EST


Adrian Day

Chairman and CEO, Adrian Day Asset Management

Loews Corp. (L) has finally made a long-awaited new acquisition, spending $1.2 billion of its $5 billion cash hoard to buy Consolidated Container Company, a plastic packaging manufacturer, notes Adrian Day, editor of Global Analyst.

If not exactly exciting, the company meets Loews’ acquisition criteria as set out by CEO James Tisch: it is in a fragmented industry offering opportunities for further acquisitions.

In addition, the acquisition meets Tisch's criteria for a company having strong cash flows, and ones that are unlikely to be subject to major technological disruption.

The acquisition also diversifies Loews’ portfolio into a relatively stable area to help offset the volatile oil and gas sectors.

Loews, trading at a 14% discount to its Net Asset Value, with upside potential from its oil and gas as well as more steady cash flows from its hotels and insurance units, and a still rock-solid balance sheet, remains a long-term holding.

Given the discount is well below historical average, we would look for a wider NAV discount to step up additional buying.

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