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Well run company and depressed stocks

LUK was founded in 1854. It engages in manufacturing, telecommunications, property management and services, gaming entertainment, real estate activities, medical product development, and winery operations. It is run by two very talented managers- Ian Cumming and Joseph Steinberg, who have received praise from Warren Buffet.

LUK has been depressed recently because the company recently made large investments in two financial stocks: 27.5% of Jefferies & Company (ticker:JEF) and 25.6% of Americredit (ticker:ACF). Since LUK owns over 20% of the stock in these companies, they use the "fair value" method of accounting, where the stock value is marked to market on the balance sheet.

It is quite possible that LUK will trade lower if the bear market in financials resumes, so it is recommended gradually scaling into LUK stock to build a position. LUK pays a small dividend, but is relatively tax friendly and can be owned in taxable accounts. LUK is a hard stock to buy at a cheap price, so it is better to be early and accept some short term weakness.

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