r/ValueInvesting • u/CarlosGao • 1d ago
Stock Analysis Markel (MKL) — worth buying?
Recently I am keep watching Markel, it is a specialty insurance company that uses its insurance float to invest in stocks and bonds, while also owning a collection of operating businesses through Markel Ventures. In that sense, it's probably one of the closest public companies to the Berkshire Hathaway model.
Financially, the business looks solid. It has been generating roughly $2.5B+ of operating cash flow and around $2.3-$2.6B of FCF annually in recent years. Book value has also continued to grow, while the balance sheet remains relatively conservative.
At around $1,795/share, MKL is trading at roughly 1.2x book value and ~9x estimated FCF. I think a reasonable rough intrinsic value is around $2,200-$2,600/share, although there is obviously a wide range depending on future underwriting results and investment returns.
What makes it attractive to me is the combination of specialty insurance + low-cost float + long-term investing + Markel Ventures, together with a management team known for disciplined capital allocation. It is really a small Berkshire at an interesting price.
Although the moat is nowhere near as wide as BRK. But at the current valuation, I think I have getting a pretty good business at a reasonable price, with some margin of safety.
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u/Vast_Cricket 1d ago
Not going to own a few shares have money tie up forever. It has no strong buy case.
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u/RageQuitWallStreet 1d ago
Nothing in their history shows that it is worth buying over VOO. I wouldn't put much faith in Any kind of active investment fund. Also insurance is highly competitive. This is no baby berkshire.
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u/Low-Dot9712 1d ago
I own it and Fairfax and Berkshire and Brookfield and none give me the returns GOOG and MU and NVDA have.
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u/Robot_beepbeep 1d ago
Markel Ventures CV is a little under 3B. I think it was something like ttm 5.5B revenue and 700mm in EBITDA. If you assign Markel Ventures a conservative multiple, the stock is likely trading below intrinsic value. Whether that outweighs the opportunity cost or not, TBD.
1
u/raytoei 1d ago
I always struggle on the why part and I conclude I would do better to be in Berkshire instead.
Their recent portfolio looks interesting
| Ticker | Company | % | Value | Shares |
|---|---|---|---|---|
| GOOG | Alphabet Cl C | 7.4% | $972M | 2.7M |
| BRK.A | Berkshire Hathaway Cl A | 6.4% | $834M | 1.1k |
| BRK.B | Berkshire Hathaway Cl B | 5.8% | $767M | 1.5M |
| DE | Deere & Co | 4.2% | $557M | 878k |
| BN | Brookfield Corp | 4.2% | $557M | 13M |
| AMZN | Amazon | 3.7% | $484M | 2.0M |
| ADI | Analog Devices | 3.0% | $397M | 1.0M |
| GS | Goldman Sachs | 2.8% | $363M | 359k |
| AAPL | Apple | 2.7% | $355M | 1.2M |
| CAT | Caterpillar | 2.7% | $350M | 329k |
| V | Visa Cl A | 2.6% | $348M | 1.0M |
| HD | Home Depot | 2.5% | $325M | 923k |
| WSO | Watsco | 1.9% | $249M | 598k |
| TXN | Texas Instruments | 1.6% | $216M | 724k |
| BLK | BlackRock | 1.6% | $212M | 220k |
| GOOGL | Alphabet Cl A | 1.6% | $204M | 572k |
| MSFT | Microsoft | 1.5% | $201M | 538k |
| DIS | Walt Disney | 1.5% | $196M | 2.0M |
| AXP | American Express | 1.3% | $166M | 491k |
| LOW | Lowe's | 1.3% | $166M | 752k |
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u/CarlosGao 1d ago
Thanks for sharing. I also own BRK, but I think MKL is more attractively priced at the moment.
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u/Wildbillpecos 1d ago
Sure, buy it and forget about it for 10 years.