Loews chief James Tisch beats Buffett returns

Loews chief executive 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-stock index 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. 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.

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, a company more than 10 times the size of Loews.

Growth in Loews’s 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 rival.

“That’s validation of Loews’s ability to allocate capital,” says Fred Fialco, a portfolio manager at Torray, a Bethesda-based investment firm that owns Loews shares. “They know how to compound earnings.”

Tisch guides Loews as part of a triumvirate. He is president and chief executive; his brother Andrew, 62, and their cousin Jonathan, 58, are co-chairmen. Together, they run a conglomerate with a $15.2 billion market capitalization as of April 10 that traces its origins to a single New Jersey hotel bought more than six decades ago by Jim Tisch’s late father, Laurence, and his late uncle, Robert.

Collectively, Jim, Andrew and their mother, Wilma, together with Jonathan and his mother, Joan, own 21.2 percent of Loews shares, worth $3.2 billion on April 10, according to government filings.

The company now oversees 17 luxury hotels in the United States and Canada, insurer CNA Financial, four dozen oil rigs and drill ships, a $2 billion natural gas exploration company, and pipelines that carry 11 percent of America’s average daily natural gas consumption.

Today, Jim Tisch faces a choice. After spending $1.5 billion to buy back shares since 2008, he must decide whether to leverage the company’s cash to go after the kind of beaten-down assets that have generated dramatic gains for him in the past.

Buffett has been spending: In September he paid $9.7 billion for Lubrizol, a specialty chemical maker.