Value Investing

Principles of Leucadia National

Leucadia National (NYSE: LUK) is a Berkshire-like vehicle achieved a ROE of 20.8% over a period of 29 years.

It is run by Ian Cumming and Joseph Steinberg. Some quote from their shareholder letters: “We tend to be buyers of assets and companies that are troubled or out of favor and as a result are selling substantially below the values which we believe are there. From time to time, we sell parts of these operations when prices available in the market reach what we believe to be advantageous levels.”

Five principles they abide by (from their annual letters):

  1. Don’t overpay, no matter what the madding crowd is up to.
  2. Buy companies that make products and services that people need and want and provide them as cheaply as possible with consistently high quality. Lower cost and higher quality is a relentless and never-ending task. Search out candidates in out-of-favor industries that have turnaround potential.
  3. Earnings sheltered by net operating loss carryforwards are more valuable than earnings that are taxed!
  4. Compensate employees for performance and expect hard work and honesty in return.
  5. Don’t overpay!


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