Berkshire Hathaway Inc. (BRK.B), Abbott Laboratories (ABT): The S&P 500’s 5 Most Loved Stocks

Loews

Why are short-sellers avoiding Loews?

Not to be confused with the do-it-yourself improvement store, this Loews is another conglomerate that’s primarily involved in property and casualty insurance, but it also has energy and hotel operations. The big reason I believe short-sellers have no interest in Loews has to do with the impressive cash flow that its P&C insurance business creates. Even if a catastrophe loss strikes, it gives Loews’ subsidiaries ample justification to boost premiums now to cover similar losses later. In essence, the insurance business is destined to make money so long as the management team stays fiscally responsible.

Do investors have a reason to worry?

To make this a perfect five-for-five, no, I don’t feel investors have many reasons to be concerned at the moment. In its second-quarter report Loews reported a nearly fivefold increase in net income compared to last year, with revenue rising 11% to $3.74 billion. Not having a slew of one-time charges this go-around sure helped, but it also points to Loews’ strengthening insurance business. Furthermore, with interest rates bound to head higher at some point after the Fed decides to pare back its monthly bond-buying program, Loews’ insurance investment portfolio is bound to get a boost, as a good portion of its investments are in U.S. bonds.

The article The S&P 500’s 5 Most Loved Stocks originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Berkshire Hathaway and Loews. It also owns shares of Philip Morris International and recommends Coca-Cola.

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