Chasing Value: Lorillard Inc. joins the S&P 500

Posted Jun 4th 2008 3:33PM by Sheldon Liber
Filed under: Press Releases, Chasing Value™, S and P 500, Stocks to Buy, Best Stocks for 2008, Loews Corporation (L), Lorillard Inc. (LO)

Loews Corp. (NYSE: LTR) just split out Lorillard Inc., which will trade under the ticker LO. Standard & Poors has announced that it will make Lorillard the newest member of the S&P 500, dropping Ambac (NYSE: ABK) from the index. (I mentioned this in early January when I posted Chasing Value: Loews Corp. has all the right pieces making it one of stock picks for 2008; for the latest on that, see Chasing Value: 8 stocks for 2008 -- May beats all).

The transaction will close as of trading on Tuesday, June 10. Lorillard is being distributed to the public via a two-tier process involving: 1) the retirement of the tracking stock Carolina Group (NYSE: CG), in exchange for which approximately 62% of Lorillard's common stock will be issued, and 2) an offer in which shares of S&P 500 constituent Loews Corp. can be exchanged for the remaining shares of Lorillard

It was a smart move by Loews company management to separate the tobacco company from its other interests in hospitality, oil exploration, real estate and insurance.

Lorillard is a producer and seller of cigarettes, under brand names including Newport, Kent, True, Maverick and Old Gold. Headquartered in Greensboro, NC, the company will be added to the S&P 500 GICS (Global Industry Classification Standard) Tobacco Sub-Industry index.

LTR is up $1.37 in afternoon trading to $51.87; Lorillard Inc. has not begun to trade yet.

UPDATE: closing price $50.54, +$1.04 for the day (+2.10%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I do not own LTR or LO.

Tags: Chasing Value, ChasingValue, inthenews, LO, Loews Corporation, LoewsCorporation, Lorillard Inc, LorillardInc, LTR, Sheldon Liber, SheldonLiber