Buffettwise

Markel More Berkshire-like Than Ever

I think this company out of the 18,000 publicly traded is the most like baby Berkshire than any other I have seen. The other second place would be Leucadia National, but the managers there are aging as well.

Because Gayner is young, he should get wiser and better as he ages. His performance on the portfolio side is good, but not stellar. There are several professional value managers that can trounce his record. YOU ARE NOT BUYING THIS COMPANY FOR THE PORTFOLIO MANAGER. You are buying this company because of the "free and growing float" of the cash that keeps coming in.

If they even averaged an 11% S&P style return, add to the float along with organic growth of the business, you get a "leveraged" 11% to be more in line with 17%.

Buffett's stock picks on balance have not been home runs. Most people don't get that. They have been nice (don't get me wrong), but it's been the growth in internal cash flow that allows Buffett to invest the excess capital and a nice compounded rate! That is the magic here folks.

You get the same with MKL. Most of the Re-insurance companies invest heavy in bonds, and that is why their excess float growth has not translated to growth in book value as well.

This company is bullish long-term, and that my friends is the real reason that they should continue to earn excess returns.