We had an interesting variety of earnings reports this week — some that I thought were good, but that brought the stock down anyway… some that were big “beat and raise” numbers that delighted shareholders… and, as usual, at least one real stinker, and some that were just “meh.”

“Good earnings that brought the share price down” came in from both Markel and Shopify, so we’ll start with MKL, which remains one of my largest and longest-held holdings… and to be fair, it really only brought the shares down for part of the day yesterday, it got back to climbing (a wee bit) once folks had a chance to think it over.

I did a big revamp of my “valuation” thinking for Markel earlier this year, but the basics are that I’m assuming Markel (MKL) can continue growing its earned premiums at least 5-10% per year, on average (it’s been 10-12% for a long time), with a 95% combined ratio (their goal is 90%, this year so far has been at 93%), and that they’ll earn at least 3% from their bond portfolio. Those are all conservative estimates, the numbers have been meaningfully better than that of late… but it’s been a good year for Markel, and not all years are good.

Nothing really new from the insurance side of the business so far this year, but the investments have done well. If we value their Markel Ventures operation (the non-insurance businesses they’ve bought over the years) at 12X trailing earnings, that would value those businesses at about $3.1 billion now. Markel has been paying down debt and the equity portfolio has grown, so on balance I value that collection of the non-insurance businesses at $8 billion today, up from $6.1 billion based on 2022 numbers (that’s the equity portfolio plus my assessed value of 12X earnings for Markel Ventures using the trailing 12 month numbers, minus their corporate-level long-term debt). That number can fluctuate meaningfully, though the growth of Markel Ventures has made the value a bit steadier over time… the equity portfolio has risen by a billion dollars in the last six months, but it can also fall dramatically in a market crash.

I’m comfortable keeping the other assumptions more or less the same as my “average” assumptions, though the year continues to be meaningfully better than average at the moment — the combined ratio ...