Market Opinion

This is what Jim Tisch, CEO of Loews Corp. (L), had to say on the market, back in May on the Q1 2015 Results Earnings Conference Call. It’s the smartest statement on the market I’ve read so far. Loews Corporation is a holding company with with interest in many sectors. You might be familiar with Loews hotels, which they 100% own.

“I think that, after all of these years of low interest rates and quantitative easing, what we have is markets, both fixed-income and equity markets, that are priced for perfection. When you look at companies that are auctioned in the private-equity world, what I would say is that 10x [EBITDA] is the new 6x.

And, yes, interest rates are low, but still it seems to me that even though you can finance at low rates, there just isn’t enough room for return for the equity holder at these kinds of valuations. So, my guess is that for the time being businesses look like they’re priced too high for us.

Now one of the things that I always remember is that the world is cyclical. And it’s easy to lose sight of that because we’re now in – firmly in year six of an upcycle for equity prices.

But at some point in time something will happen, people will lose all the confidence that they have and my guess is that opportunities will present itself. Like I said for offshore drilling, it could be a while and offshore drilling it’s the next several quarters in the market for businesses, it could be in the next several years.

But I’d rather be patient and get a good business at an attractive price rather than lose patience and buy a business at too higher price.”

– Jim Tisch, CEO of Loews Corp. Q1-2015 earning call.

I couldn’t agree more. It’s incredibly tough to find attractively priced opportunities in the current market.


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