Tobacco.org

Smoking Out Value at Loews 

SHARES OF LOEWS HAVE RISEN SMARTLY in recent years, but the New York conglomerate continues to trade at a discount to its net asset value. Its recent decision to spin off its Lorillard tobacco unit could help narrow the gap -- and boost the stock price. The transaction may let it shrink its total of outstanding shares by 20% and eliminate much of the remaining tobacco-liability risk that may be hurting its stock. . . .

Lorillard may benefit from the elimination of the tracking stock; many institutional investors don't like trackers because they offer no direct ownership in a company. An independent Lorillard also is apt to increase its dividend, now $1.82 a share. Lorillard also might become a takeover candidate in a consolidating global tobacco industry, owing to the strength of its principal brand, Newport.

Tisch has said that management's "singular goal is to create value for the holders of Loews common stock." The company has a history of delivering, and the Lorillard spin off is the latest move to that end.

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