Fool’s “This Stock Could Be Bigger Than Buffett’s Berkshire Hathaway”

What's being pitched by the Motley Fool Stock Advisor?

By Travis Johnson, Stock Gumshoe, January 31, 2017

A few readers forwarded this email to me recently, though I don’t know how widely it’s being disseminated at the moment… it is an ad for the Motley Fool’s flagship Stock Advisor newsletter, which has probably gotten more coverage in the pages of Stock Gumshoe than any other newsletter (if only because it’s an inexpensive “entry level” letter and has been around for a decade without changing names or editors).

The promise of the “next Berkshire Hathaway” has been around for longer than Stock Gumshoe, for certain, and those promises have always gotten attention. We were deciphering pitches about the “next Warren Buffett” during the very first days of publishing Stock Gumshoe back in 2007.

It’s no wonder why, of course — gains like the early Berkshire Hathaway investors enjoyed are the stuff of daydreams. Being a regular investor, backing Warren Buffett with $10,000 in the 1960s or 70s, and finding that 50 years later you’ve got a fortune that can endow a building at your local university is amazing… and that’s what happened to the few who invested in Berkshire and, equally important, stuck with it for decades, including during those times, like 1999, when even the news media gave up on Warren Buffett and told you he was out of touch and missing out on the promise of the internet… and those times when he hit his mid-70s and everyone expected the stock to collapse if he fell down the stairs or retired. Berkshire Hathaway was not a small or overlooked stock ten years ago, but it has risen 200% since Buffett’s 75th birthday in the late Summer of 2005.

And Berkshire had a good year in 2016, too — it’s a stock I’ve owned for a long time and have no intention of selling, so I follow it pretty closely. For what it’s worth, the Motley Fool folks have endorsed Berkshire itself, even as they also search for the next “baby Berkshire” — this same Stock Advisor newsletter also pitched Buffett’s holding company just last Summer — it’s since up about 14% versus the market’s 9% return during that same time period, though Buffett himself would note that six months doesn’t mean much… and that Berkshire isn’t likely to beat the S&P by a big margin in most years, given its large size.

So what’s the spiel this time out? The pitch is from Rex Moore, one of the Fool’s writers:

“But where is the next Berkshire Hathaway? Why hasn’t someone duplicated Buffett’s disciplined, common-sense approach of leveraging the insurance business to buy other stocks, bonds, and entire companies? Led by a charismatic investor with a gift for finding winners in ‘obvious’ places that most people miss?

“Luckily for us, we think someone has. And while Berkshire is now probably too big to achieve the massive gains it saw in the past, this new company is not: It’s only 1/30th Berkshire’s size!

“In fact, the secret is starting to get out about this ‘mini-Berkshire.’ The Motley Fool just issued its second Stock Advisor buy alert for the stock. And when the Fools re-recommend a stock, they say it’s ‘a sign of extra confidence in a company we already know well.’

“The charismatic investor I spoke about earlier is a proven winner: Since the business started 30 years ago, his company’s stock has risen more than 10,000%!”

So what is this? Thinkolator sez that the Fool is almost certainly teasing Markel (MKL). Which has indeed been recommended by Motley Fool newsletters in the past, their Inside Value letter was pitching it back in 2006 and 2007, for sure, and on many occasions after that, also using this “next Berkshire” theme, though I don’t know when Tom Gardner might have first recommended it to Stock Advisor subscribers.

And this is also a stock I’ve owned for longer than Stock Gumshoe has been around — Markel, like Berkshire Hathaway, is one of my top five holdings and has been for most of the past decade, though that has certainly fluctuated with the price and the market sentiment.