Tom Gayner serves as executive vice president and chief investment officer Of Markel Corp and president of Markel Gayner Asset Management Inc., the investment subsidiary of Markel Corp since December of 1990.
Markel Corporation markets and underwrites specialty insurance products and programs. It follows Buffett’s philosophy. Indeed, at an interview, Gayner stated that he generally looks for companies that have the following features:
1. A demonstrated record of profitability and good returns on total capital;
2. High measures of talent and integrity in management;
3. Favorable reinvestment dynamics over time; and
4. A purchase price that is fair or better.
Tom Gayner is a value investor. "We operate with a margin of safety in the investment portfolio," he has said.
Here are some of his top holdings:
CarMax Inc. (KMX):
Financially speaking, the company is very well positioned and has remained strong despite the economic slowdown. Now the company plans to expand the number of its stores in new and existing markets. It has excellent growth prospects.
Now competitors have been able to copy CarMax's business model. The company focuses more on the used-car market.
In terms of figures, sales were up 11% and the company reported a low debt/equity ratio. In addition, cash and cash equivalent increased significantly to $181.9 million as of Aug. 31, 2011 from $55.2 million as of Aug. 31, 2010.
Future expectations are promising. CarMax expects to open new stores in 2012 and 2013.
Berkshire Hathaway Cl B (BRK.B): BRK.B is a holding company that operates a diverse group of activities. Its primary segment and the growth engine is insurance. The other segments, such as the energy and utilities business, are strong and expected to grow.
Financially speaking, Berkshire is in a strong position. Book value per share has increased at a compound annual growth rate of 20.2% for several years. At the end of 2011 Berkshire had $71 billion in float from its insurance operations. In addition, the sound balance sheet enables the company to take advantage of many growth opportunities. Despite the collapse of the market in 2008, the company stood still.
Diageo Plc (DEO): Diageo is an multinational branded food and drinks company. Some of its brands include Smirnoff, Johnnie Walker, J&B, Gordon's, Malibu, Baileys, Guinness and Tanqueray. In addition, the company operates in 180 countries.
This portfolio of famous brands represents the company’s flagship and provides great advantage to the company, helping it stand in a dominant position vis-a-vis competitors.
In terms of performance, the firm is planning to expand to emerging markets to see its revenue grow. For such purpose, it is closing acquisitions across the world. Furthermore, DEO is undergoing restructuring initiatives to reduce costs and boost profitability. Some of the initiatives include improvements in operations.
Brookfield Asset Management Inc. (BAM): Brookfield Asset Management Inc. is an asset manager that focuses on property, power and infrastructure assets. The company follows sound corporate governance practices to retain the investor’s confidence.
Management is always willing to take risk to increase return and fosters employees to think and act as business owners.
Walmart Stores Inc. (WMT): Walmart Stores, Inc. is the world's largest retailer. Its three major segments include the Walmart Stores segment, the SAM'S Club segment and the International segment.
As regards the international segment in particular, it involves operations in 14 countries. Total sales increased in 2010 and the company is expected to expand its international presence to boost growth. A risk in this segment involves fluctuations in the currency exchange rate that can adversely affect sales.
A particular feature of Walmart is its capacity to retain customers loyalty. It does so by offering products and services and low prices.
Financially speaking, the company has a strong balance sheet. Cash and cash equivalents amounted to $7,907 million in the last year and its debt to total capitalization ratio decreased from 39.6% to 36.9%. Furthermore, the company generated positive cash flow and returned almost $2.7 billion to shareholders.
Walmart has completed many acquisitions in the last years to boost growth. Of course, these acquisitions have also brought certain risks. Products offered by the company come from suppliers, both domestic and international. The dependence on them also involves a risk.