Value Investing grapich novel

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.


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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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7/16

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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8/16

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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14/16

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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15/16

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

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Value Investing grapich novel