Leucadia National Says Chairman Cummings Will Retire

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Leucadia National Says Chairman Cummings Will Retire
Leucadia National Corp. (NYSE:LUK) is a holding company that has been nicknamed ‘the mini Berkshire Hathaway.’ The annual letters to investors are read with zeal by avid investors. Leucadia National Corp. (NYSE:LUK) is also the largest shareholder of Jefferies Group, Inc. (NYSE:JEF), a large financial institution.
Today the company announced that Chairman Ian Cummings of Leucadia will retire after his contract is up in June 2015. Mr. Cummings, 71, will be standing for re-election to the board next month during the firm’s annual investors meeting.

Cummings has been a chairman since 1978 and has a history with Leucadia President Joseph Steinberg, in which they together built the company which specializes in investments. Despite this, the chairman has hinted to a retirement in recent years in his letters to shareholders.

Leucadia also has a partnership with Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) to invest in commercial real estate.

Historically, Leucadia National Corp. (NYSE:LUK) has provided shareholders with great returns. The stock has a compounded annual growth rate of 26% from 1978 till 2011. Unfortunately, JEF has been under fire lately for being accused of having similar balance sheets at the failed MF Global which failed on October 31st.

That report was strongly denied by the company. JEF was accused of having large holdings in Greece, Italy, Ireland, Portugal and Spain government debt which contributed to the company’s stock falling 14% last November.

Leucadia National Corp. (NYSE:LUK) has a strong history and a great track record but the market is still fearful of the situation in Europe, despite repeated denials by JEF.

On a personal note, if an executive or chairman of the board has had a very influential term with the company and retires, this is often a difficult time for the company. The leadership of that individual has propelled the firm to great heights and once he has left it could be hard for the firm to continue on its path.

We never recommend investment decisions: however, take that factor into account onto of the risky holdings, we would not be a holder of Leucadia stock, there is just too much downside potential for the stock. If Leucadia gets into a similar bind that MF Global did late last year, it will hurt its holdings in Jefferies Group, Inc. (NYSE:JEF) as well thereby affecting Jefferies returns.

Leucadia National Corp. (NYSE:LUK) currently trades at $24.15 as of this writing. In the last 52 weeks Leucadia has seen a high of 39.09 and a low of 20.19.

The current price would suggest that the stock is on the lower end of the spectrum and could be heading lower if its holdings go south. Shrinking margins will also play a big factor into the company’s possible demise. Watch out for Leucadia’s potential fall.

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