Tom Gayner manages the investment portfolio of insurance company Markel Corp (MKL, Financial). Since its IPO in 1986 and through the end of 2009, the company had grown the book value per share at a compound annual rate of 21.2%. This compares favorably to the growth of the S&P 500 of 9.3% over the same period, according to the company’s 2009 Annual Report.
Markel Corp. (MKL), Fairfax Financial Holdings (FRFHF, Financial) and Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) are three insurance companies that managed to grow their book value at fast clips long terms. The three companies share a similar business model: a successful insurance operation that generates premium (“float”) and a savvy asset allocator who can turn a pile of money into a larger pile over the course of decades. The investment portfolios of the three companies are managed by Tom Gayner, Prem Watsa, and Warren Buffett respectively. GuruFocus tracks their equity investment activities. You can click on their names to see the details.
The company’s annual report contains an investment. It is brief and contains good portfolio management advice. I would like present here in its entirety (emphasis mine):
As of March 31, 2010, Markel Corp. held $1.66 Billion stocks in 77 stocks. Putting that against the background of the company’s total investment portfolio of about $8 billion, one can conclude that the company is still very conservative one quarter into the year. According to GuruFocus data, the company has always maintained a low equity position for the past few years:
Here are the top holdings of Markel Corp. as of March 31, 2010:
No. 1: CarMax Inc. (KMX, Financial), Weightings: 8.25% - 5,307,599 Shares
CarMax Group is a subsidiary of Circuit City Stores, Inc. Carmax Inc. has a market cap of $4.51 billion; its shares were traded at around $20.17 with a P/E ratio of 17.2 and P/S ratio of 0.6.
Markel Corp. kept its shares pretty steady – selling about 14,000 shares out of 5.3 million shares in 1Q10.
No. 2: Berkshire Hathaway Inc. (BRK.B), Weightings: 7.9% - 1,570,400 Shares
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $173.7 billion; its shares were traded at around $70.04 with a P/E ratio of 20.4 and P/S ratio of 1.6. Berkshire Hathaway Inc. had an annual average earning growth of 13.2% over the past 10 years.
Tom Gayner is a big fan of Warren Buffett. He attends Berkshire Hathaway almost every year. Click here to access the complete holding history of this stock for Tom Gayner.
No. 3: Berkshire Hathaway Inc. (BRK.A), Weightings: 6.76% - 896 Shares
Yes, Tom Gayner owns Class A of Berkshire shares too. Click here to access the complete holding history of this stock for Tom Gayner.
No. 4: FAIRFAX FINL HLDGS LTD (FRFHF, Financial), Weightings: 6.49% - 279,459 Shares
Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims management. with a P/E ratio of 9.56 and P/S ratio of 1.11. The dividend yield of Fairfax Finl Hldgs Ltd stocks is 2.7%.
Markel Corp. kept its position of Fairfax Financial Holdings in 1Q10. It is interesting to see that the conservative Tom Gayner finds confidence in not only in Warren Buffett, but also in Prem Watsa.
Clickhere to access the complete holding history of this stock for Tom Gayner.
No. 5: DIAGEO plc (DEO, Financial), Weightings: 5.25% - 1,256,360 Shares
Diageo is an multinational branded food and drinks company. Diageo Plc has a market cap of $38.31 billion; its shares were traded at around $61.21 with and P/S ratio of 2.6. The dividend yield of Diageo Plc stocks is 3.8%.
Markel Corp. kept its position of Diageo plc in 1Q10. Clickhere to access the complete holding history of this stock for Tom Gayner.
No. 6: Brookfield Asset Management Inc. Ltd. (BAM, Financial), Weightings: 4.89% - 3,105,519 Shares
Brookfield Asset Management Inc. is an asset manager. Brookfield Asset Management Inc. Ltd. has a market cap of $13.32 billion; its shares were traded at around $23.2 with a P/E ratio of 28.3 and P/S ratio of 1.1. The dividend yield of Brookfield Asset Management Inc. Ltd. stocks is 2.2%. Brookfield Asset Management Inc. Ltd. had an annual average earning growth of 30.7% over the past 10 years.
Markel Corp. hardly changed its position in this BAM – adding 5,400 share on the top of 3.1 million shares. Accidentally, sitting at helm of Brookfield is J Bruce Flatt, another great asset allocator. In past 20 year, Brookfield stock returned 13% per year and in the past 10 year, 22%.
Clickhere to access the complete holding history of this stock for Tom Gayner.
Conclusion
The requirement for liquidity for Markel dictates that he puts a majority of the money in fixed income securities. Only about 20% of Markel’s investment is in stocks. He entrusts a good chuck of it with the best money managers.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Tom Gayner for Premium Members. If you are not a premium member, we invite you for 7-Day Free Trial.
Markel Corp. (MKL), Fairfax Financial Holdings (FRFHF, Financial) and Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) are three insurance companies that managed to grow their book value at fast clips long terms. The three companies share a similar business model: a successful insurance operation that generates premium (“float”) and a savvy asset allocator who can turn a pile of money into a larger pile over the course of decades. The investment portfolios of the three companies are managed by Tom Gayner, Prem Watsa, and Warren Buffett respectively. GuruFocus tracks their equity investment activities. You can click on their names to see the details.
The company’s annual report contains an investment. It is brief and contains good portfolio management advice. I would like present here in its entirety (emphasis mine):
Following the cataclysmic events in world financial markets in 2008, we enjoyed a meaningful rebound in 2009. The overall investment portfolio produced a return of 13.2% in 2009 with equities up 25.7% and fixed income returns of 9.8%.
We are very pleased with these results. Our strong balance sheet allowed us to weather the fierce storms of 2008. We endured and kept the losses in 2008 to a minimum despite the most difficult investment markets we’ve ever encountered. Keeping ourselves largely whole through the storm, coupled with our strong and highly liquid balance sheet, enabled us to continue to invest proactively in 2009.
During 2009 we steadily and consistently added funds to our equity portfolio. At year end, our exposure to publicly traded equities remains lower than our historical averages at 17% of the investment portfolio.
While we increased our holdings during the year, we remained conservative and liquid due to continued softness in the insurance market place. When insurance market pricing firms and our premium writings grow, we will accelerate the pace of our equity investing.
In our fixed income operations, we enjoyed the rebound in pricing that occurred on our holdings of corporate debt securities. This area of the portfolio suffered the most during the financial crisis. The strength of our balance sheet allowed us to maintain our positions for the rebound. Going forward we will continue to allow the proportion of corporate debt securities to diminish as a percentage of our fixed income holdings. The job of our fixed income portfolio is first and foremost to secure and protect the insurance liabilities of Markel. We will seek additional returns over and above those offered by government-backed securities only with the funds we would willingly and prudently allocate to our equity portfolio.
Our equity portfolio allocation has and will continue to include publicly traded equities, corporate debt with equity like returns and majority-controlled non-insurance subsidiaries.
Protecting the balance sheet is always the most important goal in our investing (as well as in our insurance) operations. Great pricing opportunities in the financial markets, such as we saw earlier this year, mean absolutely nothing if we don’t have the balance sheet and appropriate liquidity and cash flows to take advantage of them. Consequently we will always err on the side of conservatism to make sure we have the balance sheet strength to act in the long-term best interests of the Company.
We saw the value of maintaining our balance sheet strength over the last two years. Many previously blue chip financial institutions have been wiped out. Others exist only due to government influence and largesse. Their shareholders suffered total or near-total wipeouts. At Markel management’s investments in the Company represents the bulk of our personal net worth. We will never operate in such a way as to endanger the firm.
As of March 31, 2010, Markel Corp. held $1.66 Billion stocks in 77 stocks. Putting that against the background of the company’s total investment portfolio of about $8 billion, one can conclude that the company is still very conservative one quarter into the year. According to GuruFocus data, the company has always maintained a low equity position for the past few years:
Here are the top holdings of Markel Corp. as of March 31, 2010:
No. 1: CarMax Inc. (KMX, Financial), Weightings: 8.25% - 5,307,599 Shares
CarMax Group is a subsidiary of Circuit City Stores, Inc. Carmax Inc. has a market cap of $4.51 billion; its shares were traded at around $20.17 with a P/E ratio of 17.2 and P/S ratio of 0.6.
Markel Corp. kept its shares pretty steady – selling about 14,000 shares out of 5.3 million shares in 1Q10.
No. 2: Berkshire Hathaway Inc. (BRK.B), Weightings: 7.9% - 1,570,400 Shares
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $173.7 billion; its shares were traded at around $70.04 with a P/E ratio of 20.4 and P/S ratio of 1.6. Berkshire Hathaway Inc. had an annual average earning growth of 13.2% over the past 10 years.
Tom Gayner is a big fan of Warren Buffett. He attends Berkshire Hathaway almost every year. Click here to access the complete holding history of this stock for Tom Gayner.
No. 3: Berkshire Hathaway Inc. (BRK.A), Weightings: 6.76% - 896 Shares
Yes, Tom Gayner owns Class A of Berkshire shares too. Click here to access the complete holding history of this stock for Tom Gayner.
No. 4: FAIRFAX FINL HLDGS LTD (FRFHF, Financial), Weightings: 6.49% - 279,459 Shares
Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims management. with a P/E ratio of 9.56 and P/S ratio of 1.11. The dividend yield of Fairfax Finl Hldgs Ltd stocks is 2.7%.
Markel Corp. kept its position of Fairfax Financial Holdings in 1Q10. It is interesting to see that the conservative Tom Gayner finds confidence in not only in Warren Buffett, but also in Prem Watsa.
Clickhere to access the complete holding history of this stock for Tom Gayner.
No. 5: DIAGEO plc (DEO, Financial), Weightings: 5.25% - 1,256,360 Shares
Diageo is an multinational branded food and drinks company. Diageo Plc has a market cap of $38.31 billion; its shares were traded at around $61.21 with and P/S ratio of 2.6. The dividend yield of Diageo Plc stocks is 3.8%.
Markel Corp. kept its position of Diageo plc in 1Q10. Clickhere to access the complete holding history of this stock for Tom Gayner.
No. 6: Brookfield Asset Management Inc. Ltd. (BAM, Financial), Weightings: 4.89% - 3,105,519 Shares
Brookfield Asset Management Inc. is an asset manager. Brookfield Asset Management Inc. Ltd. has a market cap of $13.32 billion; its shares were traded at around $23.2 with a P/E ratio of 28.3 and P/S ratio of 1.1. The dividend yield of Brookfield Asset Management Inc. Ltd. stocks is 2.2%. Brookfield Asset Management Inc. Ltd. had an annual average earning growth of 30.7% over the past 10 years.
Markel Corp. hardly changed its position in this BAM – adding 5,400 share on the top of 3.1 million shares. Accidentally, sitting at helm of Brookfield is J Bruce Flatt, another great asset allocator. In past 20 year, Brookfield stock returned 13% per year and in the past 10 year, 22%.
Clickhere to access the complete holding history of this stock for Tom Gayner.
Conclusion
The requirement for liquidity for Markel dictates that he puts a majority of the money in fixed income securities. Only about 20% of Markel’s investment is in stocks. He entrusts a good chuck of it with the best money managers.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Tom Gayner for Premium Members. If you are not a premium member, we invite you for 7-Day Free Trial.
