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Tom Gayner is the head of Markel Gayner Asset Management, the investment subsidiary of Markel Corporation (MKL). Markel is a company that markets and underwrites specialty insurance products and programs. Gayner has been the CIO of Markel since 2004 and has been in charge of Markel Gayner Asset Management since 1990. The equity portfolio of Markel returned 11.1% per year between 2000 and 2009. Since the end of September last year, the top 10 positions of the 13F portfolio of Gayner returned 18%, versus 16% for SPY. The calculation assumes that Gayner did not increase or reduce these 10 positions since September.

Top 10 positions of Markel Gayner Asset Management as of September 30, 2011

Company Name

Ticker (*1000)

Value

Return since Sep

CARMAX INC

KMX

124000

38.45%

BERKSHIRE HATHAWAY

BRK.B

112023

11.09%

FAIRFAX FINL

OTCQB:FRFHF

107503

10.34%

BERKSHIRE HATHAWAY

BRK.A

102314

10.69%

DIAGEO PLC

DEO

94774

13.96%

BROOKFIELD ASSET MGT

BAM

85046

10.54%

WAL MART STORES INC

WMT

55631

16.34%

EXXON MOBIL CORP

XOM

55015

19.74%

UNITED PARCEL SERVICE

UPS

46887

19.52%

DISNEY WALT CO

DIS

46470

31.56%

Markel is investing its float in the stock market just like Warren Buffett's Berkshire Hathaway. The fund also invested a certain part of its portfolio in Berkshire Hathaway Inc. As of September 30, 2011, the fund had $112 million invested in BRK-B and another $102 million invested in BRK-A. These two positions returned 11.09% and 10.69% respectively since the end of September, both lower than the16.30% for SPY. Tom Russo's Gardner Russo & Gardner also had $400+ million invested in BRK at the end of September.

The largest position of Markel Gayner is CarMax Inc . At the end of the third quarter, the fund had $124 million invested in this stock. KMX is also the best performing position among the 10 positions listed above. It returned 38.45% so far since the end of September, beating the market by 22 percentage points. CarMax is a retailer of used vehicles. For the three months ending November 30, 2011, the company reported revenue of $2.2 billion, up from $2.1 billion for the same period a year ago. Net income also increased from $82.36 million to $82.79 million. At the end of the third quarter last year, there are 19 hedge funds with KMX positions. Besides Markel Gayner, John Thaler's JAT Capital Management also had $92 million invested in this stock.

Walt Disney Co. also returned more than 30%. It was up 31.56% so far since the end of September, outperforming the market by 15 percentage points. There are 34 hedge funds that disclosed owning DIS in their 13F portfolios at the end of the third quarter. Markel Gayner increased its DIS stakes by 4% over the third quarter. As of September 30, 2011, the fund had $46 million invested in DIS. Jim Simons' Renaissance Technologies also had $100+ million invested in this stock.

We like Gayner. He once stated in an interview with Morningstar that the businesses he seeks should have: a demonstrated record of profitability and good returns on total capital, high measures of talent and integrity in management, favorable reinvestment dynamics over time, and a purchase price that is fair or better. We believe that by focusing on Gayner's top stock picks, investors will be more likely to outperform the market in the long term.

Source: Tom Gayner's Top 10 Positions Returned 18% Since September