“The ONE Remarkable Stock to Own Now” Redux

By Travis Johnson, Stock Gumshoe, December 12, 2007

Here we are again — folks start thinking about Warren Buffett again, now that he seems to be on CNBC every day and Berkshire Hathaway has had a remarkable year (up about 50%, not bad for one of the biggest companies in the country).

And so the “next Warren Buffett” teasers start circulating again. I’m republishing this note that I first put out back in March, when the Gumshoe was in its infancy and many of you were not yet on board (nice to have you here with us, by the way). Even back in March, this teaser was fa from new (I saw it several times in 2006, and perhaps it was around before that).

The other reason I’m putting this note back out? I actually like and own shares of this company, and they and their ilk have gotten a lot of attention in the last few weeks as we have closed out another hurricane season without any severely damaging storms. That means property and casualty insurers (of which this is one, as is Berkshire) should have made money hand over fist (they charged high rates because of the raised risk awareness and improved pricing environment following hurricanes Katrina and Rita, but have had, we assume, to pay out less of the raised rates to settle claims). That’s not to say that this is a great investment now, but it is one that has languished throughout the year and is currently cheaper than it was the last time I bought shares.

So … the original writeup follows:

And here we are with yet another “next Warren Buffett” investment … Finding the next “Warren Buffett Stock Market Miracle.”

this time, from Philip Durell at the Motley Fool’s Inside Value newsletter.

In exchange for a free trial subscription, you can download the free report, “The ONE Remarkable Stock to Own Now”

Now I must confess — I’ve known what this stock is for a long time, and I actually own it (you can see my writeups on it over at One Guy’s Investments if you’re interested). That’s because this has been Durell’s “one remarkable stock” for quite a while, he’s been recommending it and updating this report for probably a year or so (not sure when I first saw this one, but it was a long time ago).

But since they’re still using this report to sell the subscription, I thought I should get the word out here.

Here are the clues provided:

“Philip just discovered a company that’s one step ahead of where Berkshire was in the ’70s!”

“As recently as five years ago, you could’ve gotten into this little company for around half as much as you can now.”

And a nice tease: “as profitable as this stock has been for investors, Philip expects it to DOUBLE AGAIN WITHIN JUST A FEW YEARS.”

Insurance float allocation and investment, the Buffett strategy, is also what drives this company.

This company is “following the Berkshire model to a ‘T.'”

And another tease: “In other words, if you missed out on the Warren Buffett stock market miracle, you have a second chance, with the potential for serious wealth-building results.”

Market cap just under $5 billion.

More than $330 million in cash.

The shares have doubled “in the last few years.”

So this next Warren Buffett (which is not the same as the other “next Warren Buffett” stocks I’ve written up here — Brookfield Asset Management and White Mountains Insurance) is …

Markel Corporation (MKL)

As I noted above, I actually own shares in this company — you can see all my Markel writeups over at http://oneguysinvestments.com/labels/MKL.html — so as you can imagine, I agree that it’s a good investment … and I’m a bit biased.

But it has certainly climbed a lot lately — I’m guessing Durell started recommending it in the low $300s or so, which is at least when I started noticing this ad.

And as noted in the teasers above, it has doubled since roughly this same time in 2003, though much of that gain came over the past year.

It is indeed just under $5 billion in market cap still, around 4.8 as I type this, though the cash figure is a bit misleading since earnings reports since then haven’t been reflected in the teasers (and it’s always a mess to figure cash for an insurance company, anyway) — currently, as I read it they also carry some debt so strictly speaking there’s no net cash on the books. And as befits a “next Berkshire Hathaway”, the bargain hunters at Markel have started picking up some non-public operating businesses (a local bank near their Virginia headquarters, and a bakery supply company) in addition to their impressive value-oriented stock market holdings.

While book value has climbed significantly over the years, as management aims for, it’s still at the upper end of price/book ratios that it has traded at in recent years, so some would call this somewhat expensive. You might get a better bargain on Markel if you wait for a bad hurricane year, but I consider this one of my core holdings so I’m not interested in trying to time sales and purchases based on natural disasters.

But anyway — who wants to time their trades for next Berkshire Hathaway? If you believe Philip Durell, this will be a great long term investment almost no matter what you pay for it now

(Just a little side note: unlike most other stock market newsletters, I actually think the Fool newsletters are pretty good if you want to check them out, and I have in the past cancelled subscriptions to their products and really gotten my money back, though I’m not currently a paid subscriber to any newsletter I mention here — that would be cheating! — so I consider the Fool folks quite ethical and easy to deal with, even though they do send the LOOOONGEST advertising emails I’ve ever seen).

However — if you don’t want no stinkin’ newsletter, if you just want some stock ideas and to figure out the teasers they dangle in our faces in order to garner your hard earned cash and spam up your email box, then you can always come to your friendly Stock Gumshoe.

Want to keep up with the Gumshoe? Click here to subscribe now — free email alerts.


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17 Comments on "“The ONE Remarkable Stock to Own Now” Redux"

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Wing
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Wing
May 11, 2007 2:37 pm

Thanks Gumshoe, for validating the Fool’s newsletters. I do subscribe to 2 or 3 of them and have been quite disappointed in their long advertising e-mails — for newsletters I have bought. They look more like Agora – which I intend to cancel.

Sally
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Sally
May 11, 2007 11:52 pm

what is 2600 year old egyptian artifact could launch this tiny #2 to $27?

Your website is fantastic!!!!

One Guy
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One Guy
May 12, 2007 12:16 am

That’s Geovic, if memory serves — it’s written up in “Africa’s $10 billion secret” which is on the list of most popular posts in the sidebar.

Thanks!

SG

Teg
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Teg
December 11, 2007 9:09 pm

Oh man! I thought I had it sleuthed out. My guess was Brown & Brown. They’re in insurance, capitalization is just over 3 billion, and they are snapping up companies left and right.

Z
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Z
December 12, 2007 7:34 pm

To TEG,
Brown & Brown buys agencies that sell insurance and are owned by a private equity group.

Berkshire buys insurance companies or carriers that actually retain exposure.

Anonymous
Guest
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Anonymous
December 29, 2007 7:33 am

you are a genius, how do yo do it? Thanks for saving me time, except now I’m reading your stuff….alot.

Frankie
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Frankie
March 23, 2008 1:52 pm
Warren Buffett said recently the insurance industry faces a lot of challenges and didn’t see much growth going forward. Markel shadows Berkshire Hathaway so if Buffett is right, it could be a long difficult 10 years. Here in Florida we got a good glimpse of the desperation in the insurance industry recently as they bought out many politicians in order to try to get away with 200% premium increases. However, the public outroar was so great (they were even being referred to as the Insurance Mafia in the media), they’ve had to abandon their little scheme and are now being… Read more »
Frankie
Guest
0
Frankie
March 23, 2008 1:54 pm
Warren Buffett said recently the insurance industry faces a lot of challenges and didn’t see much growth going forward. Markel shadows Berkshire Hathaway so if Buffett is right, it could be a long difficult 10 years. Here in Florida we got a good glimpse of the desperation in the insurance industry recently as they bought out many politicians in order to try to get away with 200% premium increases. However, the public uproar was so great (they were even being referred to as the Insurance Mafia in the media), they’ve had to abandon their little scheme and are now being… Read more »
Gravity Switch
Admin
11
March 23, 2008 1:58 pm

Good point on the likely poor year for insurance profits — this can be a good time to buy if good cos get beat up. Markel isn’t hat cheap yet, but I have been looking at AIG lately. Still own only MKL and BRK in this space.

Gravity Switch
Admin
11
March 23, 2008 1:59 pm

Good point on the likely poor year for insurance profits — this can be a good time to buy if good cos get beat up. Markel isn’t that cheap yet, but I have been looking at AIG lately. Still own only MKL and BRK in this space.

student of wealth
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student of wealth
May 18, 2008 8:29 am
MKL is also a stansberrry pick. they describe it as a hidden hedge fund because the capital is invested so well they get a great ROI (like buffet does). btw, chris mayer (capital & crisis) pushed WTM as the next bekshire… both look good. but wtm is trading closer o ook, has recent insider buying, and is siting on more than enough cash to payoff all its debt. mkl is more expensive from a BV perspective, and has just enough cash topayff all its debt. i like both companies but dont own them yet – looking for a better entry… Read more »
Gravity Switch
Admin
11
May 18, 2008 2:32 pm
Good points, student of wealth. This has been a Fool favorite for several years, from $200 to $500 and back down to $400, more or less. I still own shares of Markel, though I’ll probably wait for a bit more of a dip before adding to my position — I would hesitate to call them a hedge fund, they just have a good value investing philosophy and cheap access to cash from their float, though they’ve not been as aggressive at snapping up whole companies as Berkshire has of late, this is more like early Berkshire, buying shares of steady… Read more »
Mike
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Mike
June 9, 2008 5:24 pm

Thanks for debunking those annoying advertisements!

Given MKL is already $4 billion, isn’t it kind of late to jump in if one really thought it was the next BRK?

I wish they were a little more transparent about their investment portfolio.

Gravity Switch
Admin
11
June 9, 2008 8:35 pm

Thanks Mike. All depends how you look at it — Berkshire Hathaway is a $200 billion company, so Markel could expand 50-fold before catching up. $4 billion is big by many standards, but certainly not huge.

Graham Jervis
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Graham Jervis
July 2, 2008 9:42 am

Hi Gumshoe,

what do you think of MKL at these prices, i picked some up at 376.00, if i had more money i would be buying more as we speak. What are your thoughts? i think Mr. Market is giving this company away at a reasonable price now.

ste
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ste
July 28, 2008 2:51 am

i bought it at 420 when motley fool say abouti it around 350 (tree years ago) i sold it at 500 after it peaking 550 and i cancelled motley subscription i think motly is mass rubbish and mkl dont wirth actualy more than 250 it s too slow mover
i preferr a lot uve in this moment very cheap dividend payer and it is moving from florida in other 5 states just now
i d like to know what you think about this stock

btous
Irregular
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btous
August 11, 2016 6:32 pm

Ge and microsoft

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