Barron’s on Labratory Corp. of America

Yesterday, Barron’s wrote a bullish story on Laboratory Corp. of America. Chieftain Capital Management, which is run by value investing heavyweight Glenn Greenberg, has held the stock for a number of years and made a great return on the stock. Chieftain holds 3,615,421 shares as of its most recent Form 13F filing.

I thought it would be constructive to look at Chieftain’s entry point. (You can click on the graph to enlarge.) Chieftain’s initial purchase was as low as 10X earnings. According to Morningstar, LabCorp. currently trades at 15.3 times current earnings and 12.9 times its forward earnings.

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One thought on “Barron’s on Labratory Corp. of America

  1. William Mitchell

    Good point. Really two points.

    First, something like one third of Greenberg's total return came simply from buying low and watching P/E regress to the mean.

    Second, and more importantly, he took on far less loss exposure at 10x than we would buying now at 15x.

    Everybody makes mistakes. The trick is not to make expensive mistakes.

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