by Travis Johnson, Stock Gumshoe | May 17, 2023 3:08 pm
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Excellent analysis…the $1,333 to $1,550 range looks like good goalposts. The focus on growing book value certainly follows the Buffett mold, but this retired guy needs dividends. The lenders of the day don’t care much about my portfolio, but they do give credit for steady dividends, which is important when the only other regular income is from Social Security. The divvys were a booster of income for borrowing power that I recently used in refinancing my mortgage.
Travis- Thanks for your Markel valuation . I think you are very spot on with your analysis. I’m a little concerned with the MKL Ventures . I’ve been a longtime Berkshire stockholder & it seems each year in Omaha Charlie says he can’t believe no one tries to do what he & Warren have done. Markel is as close as I can figure. I put off owning MKL, until August, 2022 avg cost at 1170. I actually couldn’t pull the trigger until I had seen Gayner buying with his own funds at around the same time. I plan to be a longtime MKL stockholder. Want to add as price allows. Very comfortable owning alongside these guys. They recently added Larry Cunningham & Morgan Housel to the Board.
Thank you for doing what you do. I look forward to your analysis & comments
Thanks for your thoughts Travis
Because Markel gets compared to Berkshire a lot, what happens to the valuation if you use the exact same methodology as the Berkshire valuation?
I do use a somewhat similar methodology for Berkshire, though the insurance part is not necessarily as clear or simple. I use a multiple of their operating earnings, which includes some relatively stable underwriting profits as well as the earnings for their non-insurance businesses (I usually put a 10X multiple on all of that), and add in the net cash and the market value of the publicly traded investments. I’m probably undervaluing Berkshire a little more than I am Markel, not giving them credit for the bond income, including the $5 they might make just on holding $100b in T-bills this year… and although they use a lot of debt in the big divisions (utilities and railroad), it’s not as much debt as the public companies in those sectors carry.
Thanks for that updated valuation Travis. I’ve always been curious why you haven’t been a longtime buyer and holder of Blackstone BX? That group seems to be right up your investment alley. Would you consider looking at this behemoth for your portfolio and for us?
Mostly it’s just that I don’t watch them closely, because I don’t have as much confidence in their strategy as I do with Brookfield and the valuation hasn’t made sense to me at the
Times when I’ve happened to look in the past (many years ago). Haven’t looked at their financials in some time, but I’ll try to give BX a look.
THANKS! Love your work. I think I’ve been an Irregular for 15y or something like that. I can’t believe how time flies.
Knowing how you heavily weight leadership when valuating of a company, I thought you might be interested in this interview with Blackstone’s Schwartzman. He’s a big reason why I’ve invested in BX for so long (with excellent returns). I see continued scaling up with Blackstone.
https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/voices-of-ceo-excellence-blackstones-stephen-schwarzman
Thanks… they’ve certainly had a solid recovery from the real estate panic recently.
Yes, I think that dip in 2022 has created a good opportunity to build a position. Just opinion, of course. Have a great day, keep up the amazing work. I appreciate it all.