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.”
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.
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.