One of the baby Berkshires is sinking its teeth into the Food Network and the Cooking Channel.
It’s not that U.S. conglomerate Leucadia National (Trades, Portfolio) Corp. wants an extra plug for its National Beef products.
The New York-based Leucadia effectively seized on a huge opportunity, which emerged as a result of a $15 billion deal between the Food Network’s parent, Scripps Networks Interactive Inc. (SNI, Financial), and Discovery Communications (DISCA, Financial). The two companies just recently made their union official.
Tennessee-based Scripps Networks Interactive was among the major positions established by the company in the fourth quarter.
All three picks involved mega-mergers that are bound to reshape key industries.
For example, another pick to the portfolio included shares of Aetna Inc. (AET, Financial), signaling a nod to the company’s merger with CVS Health Corp. (CVS, Financial). The $69 billion deal was announced in early December.
Leucadia’s portfolio weighs heavily on consumer cyclical stocks and is valued at $1 billion. In other holdings, financial services make up 4.4%; basic materials, 3.6%; health care, 2.8%, technology, 2.3%; communication services, 1.9%; energy, 1.2%; the remainder is in utilities, consumer defensive and industrials.
Leucadia, like the original Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A)(BRK.B), has created a number of conglomerates or side businesses to try to make money. For example, it runs merchant banking and businesses such as National Beef Packing and Jeffries.
It was dubbed a mini-Berkshire long ago because of its investment strategy modeled after Buffett's focus on reviving assets that are out of favor, then selling them for a profit.
Leucadia reported total net revenues of almost $9 billion for the nine months ending Sept. 30, 2017. Fourth-quarter and full-year earnings should be released by March 1.
Scripps Networks Interactive
Media company Scripps soared last summer when Discovery Communications announced the deal to buy it. Scripps stock jumped to $88 from $67 a share in a matter of weeks. It is up 14% over the last 12 months.
This isn’t the first time Leucadia has taken an interest in Scripps. Two years ago, it purchased 3,500 shares for an average price of $59 a share, then dumped it a short while later.
In late 2017, it grabbed more than 186,000 shares at about $82 a share for a 1.22% position in the portfolio.
In afternoon trading, Scripps was up 0.37% to just under $88 a share.
According to GuruFocus, the company has a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 out of 10. The company has seen a decline in gross margin, but is boosted by a Piotroski F-score that is high.
Scripps has a market cap of $11 billion.
Aetna
Leucadia also purchased 163,000 shares of health care benefits giant Aetna for an average price of $171.88 per share. It holds 2.24% of the portfolio.
In December, drug store giant CVS Health announced it was paying $69 billion to buy Aetna, one of the largest managed care organizations with more than 22 million medical members in the U.S.
The union between the drug store giant and Aetna was said to have the potential to reshape healthcare in the U.S.
In early afternoon trading, the Connecticut-based Aetna was at $177 a share, or up 0.14%. The stock has surged by 37% in the last 12 months. It peaked at almost $194 in late January after all the buzz from the deal with CVS Health.
The company with a market cap of $57 billion has seen its growth in revenue per share go down, as well as declining operating margins. As a result, GuruFocus ranks it a 6 of 10 in financial strength; 7Ă‚ of 10 in profitability and growth.
MonsantoÂ
The Monsanto Co. (MON, Financial) provides farmers with agricultural products, such as genetically-engineered seeds and Roundup, an herbicide. It produced the first genetically modified crop seeds more than two decades ago and has remained an industry leader through product development and licensing agreements.
The St. Louis-based Monsanto is pending regulatory approval in connection with an acquisition deal with Bayer AG (XTER:BAYN) for $64 billion. The European Commission is reviewing the deal under antitrust laws. A decision is expected by April.
In afternoon trading, the company was selling for $120.70 a share, up 0.43%. It has seen its stock grow 11% in the last 12 months.
Monsato has seen consistent growth in revenue per share, has a high Piotroski F-Score and its price-earnings and price-book ratios are close to two-year lows.
The company’s operating margins have been on the decline, however. For this reason, it received a 6 out of 10 in financial strength and an 8 of 10 in profitability and growth.
Monsanto has a market cap of $53 billion.
