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Tisch Beats Buffett With 8% Return Citing Diana Ross

May 10, 2012 | About:

Loews Corp. Chief Executive Officer James Tisch is the dealmaker who won’t make a deal.

He has almost $50 billion to invest, including premiums from an insurance company his New York-based conglomerate owns. Yet Tisch hasn’t made a big purchase in five years, holding off even during the 2008 and 2009 financial meltdown, when the Standard & Poor’s 500 Index (SPX) fell more than 50 percent.

Tisch gives a musical answer when asked about acquisitions. “Do you remember Diana Ross and the Supremes?” he muses in his seventh-floor office on the East Side of Manhattan. He then breaks into a smooth, tenor rendition of one of the Motown trio’s 1960s hits.

“You can’t hurry love,” Tisch croons, slicing the air with his hand. “No, you just have to wait.”

Tisch, 59, says he won’t rush into any big purchase, partly because hungry private-equity firms are driving up prices. Other U.S. corporate chieftains are equally reluctant. The companies in the S&P Industrial Index, which excludes financial firms and utilities, are holding a record stash of more than $1 trillion and, like Loews, are using some of their cash to buy their own shares rather than taking on new enterprises in a shaky economy.

Even while counseling patience, Jim Tisch and his management team have outperformed the value investor and serial acquirer to whom they’re often compared: Warren Buffett. Since Tisch took over the top spot at Loews in December 1998, the firm’s shares have returned 8 percent annualized through the end of March, almost double the 4.3 percent return of the Class A stock of Buffett’s Berkshire Hathaway Inc. (BRK/A), a company more than 10 times Loews’ size.

Book Value

Growth in Loews’ book value per share -- a metric favored by Buffett -- has averaged 10 percent annualized from 1998 through 2011 compared with 8.1 percent for its Omaha, Nebraska- based rival.

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About the author:

GuruFocus
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now pre-order his book Invest Like a Guru on Amazon.

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