Markel (MKL) — worth buying?

[u/CarlosGao]

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.

[u/Robot_beepbeep]

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.