Leucadia National Corporation (LUK) reported Q4 2009 result last Friday, click here for Leucadia’s filings.

Long time readers may recall that LUK was my dumb trade of the month last year. I no longer have a position in LUK, but am still interested in the story. For those who haven’t heard of Leucadia, think of it as a mini Berkshire run by two guys just as smart as Warren and Charlie. Leucadia’s Chairman, Ian Cummings, and President Joseph Steinberg have compiled an amazing record since 1978. See this spreadsheet for details of the 21.4% CAGR in book value and 33.9% CAGR in share price [early 2009 data].

TMFValuemoosie posted some excellent coverage on Leucadia and their results in this post.

Income from minority owned companies was a positive $806 million, compared to a $537 million loss a year ago.

Fair market value of significant equity holdings:

- 25% of AmeriCredit (NYSE:ACF). Fair market value as of year end was $640 million.

- 29% of Jefferies Group (NYSE:JEF). Fair market value $1153 million.

- 10% of Inmet Mining, valued at $339 million.

- 8% Fortescue (iron mine), valued at $1108 million at year end. Since then, the company has sold 11% of their holding for $122 million cash.

That last bit is nice. Leucadia invested $452.2 million in Fortescue, back in 2006 IIRC. In exchange they received 278 million shares, and a $100 million unsecured, subordinated note maturing in 2019. Forget about the note for a moment. They just sold 30 million shares for $122 million. So, they’ve reduced the original investment by 26%, but still retain 90% of the shares (plus the note). Looked at another way, the compounded annual rate of return on the shares they just sold was 52%. Actually, that’s the rate on all the shares, but 90% of it is as yet unrealized.

Now for the subordinate note. Payments — 4% of the revenue from the mine — are currently deferred, and are accruing interest (on interest) at 9.5%. The aggregate accrued balance receivable at year end was $106.5 million (yes, on a $100 million note with nine years to go). I have no idea what is the likelihood of ever getting paid on the note – I guess Fortescue could end up in bankruptcy and wipe the slate. But here’s where I rely on Leucadia’s savvy management. Remember, using our thumbnail shares analysis above, this note was free to start with.

Related posts:

1. Leucadia National Corp. (LUK) 2008 Report
2. Leucadia National Corp. (LUK) Better Than Berkshire
3. Facet Biotech Corporation (FACT) Q1 2009 Results
4. Akamai Reports First Quarter 2009 Financial Results, Announces Share Repurchase
5. Safety in Numbers – Q4 2009 Results
6. Akamai Accelerates Its Earnings in Q3 2009