1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
James Li
James Li
Articles (1292)  | Author's Website |

Tom Gayner’s Top 5 Buys in the 4th Quarter

Markel co-CEO releases portfolio

Tom Gayner (Trades, Portfolio), co-CEO of Markel Corp. (NYSE:MKL), disclosed this week that his top five buys for fourth-quarter 2019 included a new holding in O-I Glass Inc. (NYSE:OI) and position boosts in Mohawk Industries Inc. (NYSE:MHK), Illinois Tool Works Inc. (NYSE:ITW), Healthcare Services Group Inc. (NASDAQ:HCSG) and NVR Inc. (NYSE:NVR).

Gayner believes that the stock is part of a business, which in turn is worth the present value of cash flows. The chief investment officer of the Richmond, Virginia-based company said that Markel operates with a margin of safety in the investment portfolio and that the portfolio can earn good returns by focusing on areas where Gayner has high understanding and knowledge, a model that Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) define as the circle of competence.

04ac3ec89350e810153832a934081217.png

As of quarter-end, Markels $7.20 billion equity portfolio contains 134 stocks, of which two represent new holdings. The top three sectors in terms of weight are financial services, consumer cyclical and industrials.

eb63d8f23a657c90c8fade5d595b52cb.png

New buy: O-I Glass

Gayner purchased 350,000 shares of O-I Glass, giving the position 0.06% weight in the equity portfolio.

e88e259a3b94a9a1fb50021a6fc29cba.png

The Perrysburg, Ohio-based company manufactures glass bottles for a wide range of beverages, including beer, wine, soda and spirits. According to GuruFocus, O-I Glass operating margin has increased approximately 3.9% per year on average over the past five years and is outperforming 75.37% of global competitors, suggesting good profitability.

709e597f7ad9317e3167a38e4cdc975c.png

Despite good profitability, O-I Glass financial strength ranks 3 out of 10 on warning signs like low interest coverage and a weak Altman Z-score of 0.91.

eb8e7ed6948a332d3d01460b26a40b83.png

Steven Romick (Trades, Portfolio) and First Pacific Advisors (Trades, Portfolio) also have holdings in O-I Glass.

cce353b6158e388811d5a79154d59816.png

Mohawk Industries

Gayner added 48,000 shares of Mohawk, increasing the holding 22.54%. Shares averaged $136.34 during the quarter.

1158964f1b98c5c42b4636c2d5cf4576.png

The Calhoun, Georgia-based company manufactures a wide range of flooring products, including rugs, carpets and laminate tiles. GuruFocus ranks the companys profitability 7 out of 10 on several positive investing signs, which include an operating margin that has increased approximately 10% per year on average over the past five years and a three-year revenue growth rate that outperforms 62.10% of global competitors.

cf01945917d4576921e9edd0c71b8f7b.png

Gurus with holdings in Mohawk include Ruane Cunniff (Trades, Portfolio) and John Rogers (Trades, Portfolio) Ariel Investment.

daebae141d2040f01ed6c64ec7e6a20a.png

Illinois Tool Works

Gayner added 33,000 shares of Illinois Tool Works, increasing the position 11.54%. Shares averaged $169.96 during the quarter.

5fcc37f4a067a64194e3657173153215.png

The Glenview, Illinois-based company manufactures a wide range of industrial equipment and products, which include engineered fasteners and seat heaters. GuruFocus ranks the companys profitability 9 out of 10 on several positive investing signs, which include a three-star business predictability rank, a high Piotroski F-score of 8 and profit margins that are expanding and outperforming over 96% of global competitors.

586ba9ae68bfd598d3cdfcafeef6dbe8.png

Healthcare Services

Gayner added 177,000 shares of Healthcare Services, increasing the holding 44.64%. Shares averaged $24.81 during the quarter.

0ea9a37cd93c32e9230af3fad0af918a.png

The Bensalem, Pennsylvania-based company provides housekeeping and facility management services to the health care industry. GuruFocus ranks the companys financial strength and profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, debt ratios that outperform over 81% of global competitors, expanding profit margins and a return on equity that outperforms 80.35% of global companies operating medical care facilities.

8e0d7a405b3c71c7666ec3f89b17ea92.png

Healthcare Services valuation ranks 10 out of 10 on the back of price-earnings, price-book and price-sales ratios close to 10-year lows.

509133619844b200a909eee08b0c3c95.png

NVR

Gayner added 1,100 shares of NVR, increasing the position 15.16%. Shares averaged $3,705.32 during the quarter.

05cb9d4ec748c809b98f3ecc7421531b.png

The Reston, Virginia-based company builds single-family detached homes, town homes and condos under four trade names, operating in 28 metro areas in 14 states east of the Mississippi River. GuruFocus ranks NVRs financial strength 8 out of 10 several positive investing signs, which include robust interest coverage and Altman Z-scores.

6f568ea004b1f72f9f95977dea32b619.png

Other safe investing signs, which include expanding profit margins and a four-star business predictability rank, contribute to a GuruFocus profitability rank of 9.

5389ab999da4ddb438046bbe3538148d.png

See also

Gayner and co-CEO Richard Whitt said in Markels fourth-quarter earnings release that gross written premiums exceeded $6 million, driven by the synergies the company achieved between [Markels] underwriting and other insurance platforms. For the year, Markel reported revenues of $9.5 billion, up from revenues of $6.8 billion in 2018. Net earnings of $129.07 per share in 2019 increased from a net loss of $9.55 per share in 2018.

d5f0bbe6a1d02e948a7703aa67651f8d.png

Disclosure: No positions.

Read more here:

Not a Premium Member of GuruFocus? Sign up for afree 7-day trial here.

About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by James Li


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)