Financier Ben LeBow loves complex transactions that give him big stakes in asset-rich but out-of-favor companies. Such deals have made a lot of money for him--and his shareholders. Not that his investment vehicle, Brooke Group (BGL), has skyrocketed. Far from it. Shares of this miniconglomerate trade on the Big Board at 31/2, down from 51/2 in mid-September. But he's attracting the smart-money crowd, which thinks Brooke will break out and hit new highs in a year.
One reason: LeBow, a controversial dealmaker, is finally paying attention to beefing up Brooke's quarterly performance and bottom-line results. "This will attract the attention of a whole lot of investors when it becomes evident," says the manager of a large hedge fund who has bought into Brooke. He figures the stock is worth more than twice its current price.
This money runner notes that Brooke's unrestricted cash stash of $325 million (left over from the 1994 sale of its New Valley money-transfer business for $1.2 billion) plus assets of other Brooke units, make the shares worth more than 8.
One Brooke unit is Liggett Group, the fifth-largest U.S. cigarette maker. Liggett also owns a big factory and real estate operation in the former Soviet Union--which LeBow expects will puff up Brooke profits.
Brooke has bought 6.4% of the ShowBiz Pizza Time chain and has purchased, for $26.8 million, Ladenburg Thalmann, a 119-year-old New York securities firm.
To skeptics, LeBow points to the returns reaped by shareholders who bought into Brooke (then Liggett) in 1987 at 12 a share. Since then, LeBow figures stockholders have received cash and stock dividends of more than 20 a share, mainly from asset sales.