Covered Call Sell in Advertising
by Travis Johnson, Stock Gumshoe | May 23, 2016 3:11 pm
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Source URL: https://www.stockgumshoe.com/2016/05/covered-call-sell-in-advertising/
Barchart.com’s Chart of the Day – Merkel Corp. For May 23, 2016
The Chart of the Day belongs to Markel Corp. (MKL). I found the P&C insurance stock by using Barchart to sort today’s All Time High list first for the most frequent new highs in the last month then again for the technical buy signal of 80% or more. Since the Trend Spotter signaled a buy on 5/3 the stock gained 6.25%.
Markel Corporation markets and underwrites specialty insurance products and programs to a variety of niche markets. http://mailmgmt.barchart.com/inc/rdr.php?r=213944c177c1466c0
I really like Markel and have owned it for a decade or so, but the current valuation seems pretty extreme to me. Not selling, but I wouldn’t pile on at the 52-week high with shares trading at 1.65X book. That’s a lot for a large specialty insurer/reinsurer — the only big P&C insurer that has consistently traded above that in recent years (that I’m aware of) is Chubb, probably the best P&C insurer, and that was in the leadup to their being bought out by ACE for 1.8X book. Markel earned a valuation of more than 2X book for a while many years ago, but that was when they were growing much more rapidly (and growing book value more quickly), and when they were first being popularly touted as the “next Berkshire Hathaway.”
That “Next Berkshire” moniker still gets them a premium valuation, I think, and more attention than they would otherwise receive from investors… a great company, well run, with a good investor at the helm, but I think it’s getting too much of a premium valuation here given the softness in insurance and their relatively slow growth rate.