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An ASX lesson from investing great Frank Lowy

Sir Frank Lowy has been a legendary Australian businessman for over 5 decades. The company he co-founded – Westfield Group – is no longer with us in its old form. But many commentators list it as one of the best performing ASX shares of all time until its demise in 2014.

Of course, Sir Frank is now 89 and so doesn’t have the active role in business that he used to.

But we can still learn some lessons from him and his legacy to help us approach the ASX bear market we are currently in.

When Westfield Group was demerged in 2014, it was split into Westfield Corporation and Scentre Group (ASX: SCG). Scentre owns the portfolio of Westfield shopping centres in Australia and New Zealand, while Westfield Corporation retained the global Westfield portfolio.

Westfield Corporation was bought by French giant Unibail-Rodamco in 2017, which resulted in the company renaming to Unibail-Rodamco-Westfield (ASX: URW).

The Lowy family initially maintained an active interest in both Scentre and Westfield Corp, but has slowly relinquished its financial interests and control of both companies.

What lesson can we learn from Sir Frank and Westfield?

According to the Australian Financial Review (AFR), the decision to split the Westfield Group was very deliberate. The AFR reports that Sir Frank decided back in 2013 that retail was “irrevocably changing”, which explains the ‘split-up, divest’ strategy the family has been employing ever since.

In fact, the Lowy family sold its last 4% stake in Scentre Group last October, which the AFR reports was at a price of $3.96 a share. Today, Scentre shares are worth around $1.61 each.

But that is a drop in the ocean compared with what Sir Frank gained from his sale to Unibail-Rodamco. In 2018, Unibail-Rodamco paid $32 billion for Westfield Corporation’s assets. Today, the entire Unibail-Rodamco-Westfield company is worth around half of that sum.

In the simplest terms, the best thing to take from this tale is (in the words of the late Kenny Rogers) “you gotta know when to hold ‘em, know when to fold ‘em”.

They don’t call Sir Frank the master of timing for nothing!

Foolish takeaway

If you’re no longer confident in the future of a stock you own, selling out at the top could very well prove to be the right move. It can be hard to let go of winners. But if Sir Frank can do it with the company he founded, anyone can!

What he didn’t do was cut his ties when everyone else was trying to do just that. So if you’re thinking about letting go of some of your losers during this bear market – ask yourself what Sir Frank would do!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.