Any thoughts on Markel here? Markel is about 1.3x last known book, which is pretty cheap for them. Uncertainty on insurance liabilities likely weighing on the stock price.Personally, I have no firmly held opinion of Markel. Bought during the Alterra merger and haven't thought much more about it. Let the tax tail wag the investment dog, probably. Anyway, that won't be an issue this year...
other than size, not sure why Markel at 1.3x book is a better value than Berkshire at 1.1
You may find this interesting as I've owned Markel since its first day public in the 80's. My wife worked for the CPA firm that did their books, she is from Richmond. But anyway Morningstar at one time had analysts who were new and quite impressed with Berkshire and of course that slung them over to the Markel story.AT this time (1990's) Markel would often have an investments-to-assets ratio of 3.5 or greater and Morningstar's analysts were saying that float was the same as equity, a carry-over from their Berkshire thinking. That summary pushed them over into valuing Markel at about 4 times book value and often the stock sold for right around 3 times book value or close.Those days slowly waned, the inestments-to-equity ratio slowly fell as did Morningstar's rotating/evolving analyst coverage. Not too long ago, years after the 4x book valuation, Morningstar wasn't much above book with Markel's fair value, I just laughed as the full circle had been full achieved.I think you'll do quite ok buying Markel here. They'll have some not pleasant underwriting surprises, but I think they are wise enough to limit their exposure on any one thing. People condemn Tom Gaynor for his broad investment model, but I absolutely love his thinking on that. He knows his place and he is not an ego type that crashes and burns, he invests soundly in my view.Interestingly when the price of Markel is up in its range of price-to-book you'll see a lot of praise and press. When it is down in this ratio there tends to be silence on Markel. This seems to repeat now fairly often, in the past the stock just stayed expensive.
One view is that Markel is the "usual" insurance+investments, plus the value of Ventures.The value of the first might be roughly tracked by some multiple of book per share, with the multiple chosen to suit the value growth rate.Book per share has grown at 5.0%/year in the last 5.25 years. Ho hum.The Ventures bit is nice, but still a relatively trivial fraction of the firm. About 9% when I estimated it a year or so ago.Is it possible there's more sizzle than steak in the modern Markel?Jim
Markel has raised $600mcapital via preference shares on terms that are not that great ( 6% dividend).https://markel.gcs-web.com/static-files/38e99a84-4287-4ae5-9...Not clear why they needed to do this on such terms at this time.Seems to me there is some stress there and it may be worth waiting for clarity in the next 10-Q before jumping in.
" Markel has raised $600mcapital via preference shares on terms that are not that great ( 6% dividend)."Interesting.Kinda wish Buffett was on the other end of that. I know, I know, 6% doesn't meet his hurdle, but it sure beats the heck out of short term Trashuries getting zero.Swing you bum!
To answer Jim's querry on sizzle vs. steak: Yes, in my view. Life is great...if you can stand it.Wasn't long ago that investors following Markel were confidently tossing around 12-15% annual returns now and forevermore. About the same a Coke back in the 1990's.
I have rotated some BRK into MKL / BAM. Given the age of Warren, we could potentially see BRK trade at a discount to historical trend for some time. Good economics of the underlying businesses aside, BRK will only trade for what people will pay for it. MKL / BAM have greater growth prospects and younger / diversified management. An entry point at these levels is reasonable.“In the short run, the market is a voting machine but in the long run it is a weighing machine.”
Investors connected with both Markel and Berkshire almost unanimously state what they think is a given, that Markel (the business and evidently the stock) will outperform Berkshire. Owned Berkshire since 1975 and Markel since (I think the year was...) 1987. I am absolutely not in that belief mode, I do not whatsoever think Markel is destined to outperform Berkshire.I think it is a tossup, and if I had to bet I'd bet with Berkshire. I was in the insurance business and I know what Markel is all about and what they face going forward. They will have to be good, damn good, at what they do to get a special outcome.
"Markel has raised $600mcapital via preference shares on terms that are not that great ( 6% dividend).Not clear why they needed to do this on such terms at this time."Perhaps they want to do an acquisition/investment, without dipping into cashand that is their going rate for debt. If so, must be a pretty compelling opportunity.Carl
Any thoughts on Markel here?Thanks all.Book per share has grown at 5.0%/year in the last 5.25 years. Ho hum.Not very good. Stock price is back where it was about 4 years ago.Is it possible there's more sizzle than steak in the modern Markel?Feels like it.Markel has raised $600mcapital via preference shares on terms that are not that great ( 6% dividend).That's not good, either. 6%...Since I've owned it (Dec 2012), Markel has actually done better than Berkshire - up 117% vs 107% - but worse than SPY - up 147%. I think I'll take it.
Me: I think I'll take it.Limit order to sell half our Markel triggered today.Expect Markel to make new highs very soon... ;-)
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