LUK's tangible book per share is around $21, according to the latest 10-Q.
BAC is already trading at tangible book value. Which one is better? Are we sure LUK can continue to compound at 20% per year after Handler takes over?
I don't think it is very easy to compare LUK and BAC directly, at least in this manner. With BAC, the thesis is that underlying earning's power will emerge, e.g., at the 1.85 to 2.00 range, in the relatively near future, and with that the price should increase to 18-20 dollars correspondingly. After that occurs, I think we will all have to think pretty hard about whether to keep holding it (probably compounding returns will drop down to 10% range?). Some may hold until it gets to normalized environment for all banks, but some may drop out sooner. Holding banks for very long periods seems to be a dangerous thing to do, since they all jump off a cliff every 10 or 20 years. Thus, BAC is a return to average thesis, which is much shorter term than LUK.
LUK, on the other hand, is a compounding machine, but it isn't based on earnings that much, or at least it wasn't in the past. Now that they own all of Jefferies, it may be a bit different, and so I'm curious as to what it will be like (but do note that Jefferies was able to compound their book very well, even better than LUK in corresponding time periods).
Additionally, I would not estimate that LUK can compound at 20% per year going forward, though it may be possible. Personally, I view lots of these compounders (e.g., BRK/FFH/MKL) as somewhere in the 12-15% compounding range, over long periods of time, if bought at the right prices.
