Contrarian Patience in Asset Markets

“The Laurel-in-the-Pines deal, Larry Tisch’s first big deal, encom- passed two themes that would characterize practically all of his invest- ment decisions. First, he showed an unshakable confidence in his own instincts and a willingness to defy conventional wisdom that didn’t make sense. Second, he showed his inclination to avoid overpriced investments—such as Florida hotels—and their accompanying higher downside risk. The family resisted the temptation to be swept up in the speculative fever in Florida. Instead, they went into a far more conservative deal—one that left plenty of room for error—on terms that gave them a few years to make a go of it before committing to an outright purchase.”

“Jonathan Tisch had said earlier that year. “I was somewhat frustrated in the late 1980s when we weren’t doing deals like everyone else. They kept saying, ‘Let’s wait.’” Loews waited and, as a result, it sat in the middle of an overbuilt hotel market with plenty of cash and with plenty of desperate developers willing to sell properties at less than what it had cost to build them. In 1991, the average hotel property sale, on a per-room basis, had plunged 40 percent.”