Elliott
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Today I was drawn into the link to a "report" on "The ONE Remarkable Stock." I should have guessed that they'd have you jump through a million hoops to get it, but in the end, they named (NYSE: MKL) What does everyone think?
Here's a summary of what they said:
[FONT="]The ONE Remarkable Stock --
Markel (NYSE: MKL)[/FONT]
[FONT="]Surprised? Don't be. Historically, many of the market's best-performers have been obscure companies with names you've never heard. Even $212 billion Berkshire Hathaway is hardly a household name.[/FONT]
[FONT="]So what exactly makes Markel stand out? [/FONT]
[FONT="]Markel differentiates itself from larger property and casualty insurers by concentrating on more than 90 specialty lines of insurance, generally accepting risks that the large companies are unwilling to cover.[/FONT]
[FONT="]Its key competitive advantages are the expertise and experience of its specialist underwriters and the relationships it has built with brokers and specific trade and other groups covered.[/FONT]
[FONT="]The diversity of product lines means that no one line is responsible for more than 7% of the gross premiums written. In many of the lines, Markel has an incredible retention rate in the high-80% range -- a result of long-term relationships and niche expertise.[/FONT]
[FONT="]Although the company does face price competition in many of its lines, it is considerably less than that found in standard insurance. For the first nine months of 2007, the overall customer retention rate was 87%, up from 86% for the same period of 2006.[/FONT]
[FONT="]What is "float" and how can it work for you?[/FONT]
[FONT="]The secret sauce of any well-run insurance company is its ability to effectively use what's called "float" to produce passive investment profits. In the insurance business, float refers to the cash pool created by money that has been collected from customers but not yet paid out as claims.[/FONT]
[FONT="]Through Markel Gayner Asset Management, headed by Chief Investment Officer Tom Gayner, the company has produced stellar returns on the equity portion of its investment portfolio.[/FONT]
[FONT="]In the five-year period ending Dec. 31, 2006, the equity portion of the portfolio returned 13.9%, while the S&P 500 returned 6.2%. The fixed-income portion returned 5.4% in that time period. At the end of June, equities were 24% ($1.85 billion) of the $7.7 billion portfolio. According to the June 30, 2006, SEC 13-F filing, the top ten holdings include:[/FONT]
[FONT="]Recently, the company acquired a 40% stake in supermarket bank First Market Bank. The other 60% is owned by Ukrop's, a family-owned grocery chain. Markel intends to make similar private investments in the next few years.[/FONT]
[FONT="]The best leadership money can buy[/FONT]
[FONT="]As important, Markel has a management team that should get investors excited. It holds approximately 8.5% of the outstanding shares, and bonuses are based on the trailing five-year performance, with no bonus being paid below an ambitious threshold -- clearly aligning its interests with those of the shareholders.[/FONT]
[FONT="]Management is conservative and has cultivated a culture that focuses on underwriting discipline and improving long-term shareholder value rather than on growth at all costs. It's a testament to its discipline that the company had no need to resort to the capital markets to shore up the balance sheet to offset losses from last year's hurricanes.[/FONT]
[FONT="]I strongly believe that Markel is a superior long-term investment that is set to compound absolute shareholder value at rates that will significantly outperform the S&P 500 index for years to come. [/FONT]
Here's a summary of what they said:
[FONT="]The ONE Remarkable Stock --
Markel (NYSE: MKL)[/FONT]
[FONT="]Surprised? Don't be. Historically, many of the market's best-performers have been obscure companies with names you've never heard. Even $212 billion Berkshire Hathaway is hardly a household name.[/FONT]
[FONT="]So what exactly makes Markel stand out? [/FONT]
[FONT="]Markel differentiates itself from larger property and casualty insurers by concentrating on more than 90 specialty lines of insurance, generally accepting risks that the large companies are unwilling to cover.[/FONT]
[FONT="]Its key competitive advantages are the expertise and experience of its specialist underwriters and the relationships it has built with brokers and specific trade and other groups covered.[/FONT]
[FONT="]The diversity of product lines means that no one line is responsible for more than 7% of the gross premiums written. In many of the lines, Markel has an incredible retention rate in the high-80% range -- a result of long-term relationships and niche expertise.[/FONT]
[FONT="]Although the company does face price competition in many of its lines, it is considerably less than that found in standard insurance. For the first nine months of 2007, the overall customer retention rate was 87%, up from 86% for the same period of 2006.[/FONT]
[FONT="]What is "float" and how can it work for you?[/FONT]
[FONT="]The secret sauce of any well-run insurance company is its ability to effectively use what's called "float" to produce passive investment profits. In the insurance business, float refers to the cash pool created by money that has been collected from customers but not yet paid out as claims.[/FONT]
[FONT="]Through Markel Gayner Asset Management, headed by Chief Investment Officer Tom Gayner, the company has produced stellar returns on the equity portion of its investment portfolio.[/FONT]
[FONT="]In the five-year period ending Dec. 31, 2006, the equity portion of the portfolio returned 13.9%, while the S&P 500 returned 6.2%. The fixed-income portion returned 5.4% in that time period. At the end of June, equities were 24% ($1.85 billion) of the $7.7 billion portfolio. According to the June 30, 2006, SEC 13-F filing, the top ten holdings include:[/FONT]
- [FONT="]$232 million in Berkshire Hathaway (NYSE: BRK-A, BRK-B) [/FONT]
- [FONT="]$150 million in General Electric (NYSE: GE) [/FONT]
- [FONT="]$112 million in Diageo PLC (NYSE: DEO) [/FONT]
- [FONT="]$109 million in CarMax (NYSE: KMX) [/FONT]
- [FONT="]$85 million in Fairfax Financial Holdings (NYSE: FFH) [/FONT]
- [FONT="]$79 million in Anheuser-Busch (NYSE: BUD) [/FONT]
- [FONT="]$76 million in White Mountains Insurance (NYSE: WTM) [/FONT]
- [FONT="]$71 million in Citigroup (NYSE: C) [/FONT]
- [FONT="]$63 million in Brookfield Asset Management (NYSE: BAM) [/FONT]
- [FONT="]$53 million in United Parcel Service (NYSE: UPS) [/FONT]
- [FONT="]$45 million in Forest City Enterprises (NYSE: FCE)[/FONT]
[FONT="]Recently, the company acquired a 40% stake in supermarket bank First Market Bank. The other 60% is owned by Ukrop's, a family-owned grocery chain. Markel intends to make similar private investments in the next few years.[/FONT]
[FONT="]The best leadership money can buy[/FONT]
[FONT="]As important, Markel has a management team that should get investors excited. It holds approximately 8.5% of the outstanding shares, and bonuses are based on the trailing five-year performance, with no bonus being paid below an ambitious threshold -- clearly aligning its interests with those of the shareholders.[/FONT]
[FONT="]Management is conservative and has cultivated a culture that focuses on underwriting discipline and improving long-term shareholder value rather than on growth at all costs. It's a testament to its discipline that the company had no need to resort to the capital markets to shore up the balance sheet to offset losses from last year's hurricanes.[/FONT]
[FONT="]I strongly believe that Markel is a superior long-term investment that is set to compound absolute shareholder value at rates that will significantly outperform the S&P 500 index for years to come. [/FONT]
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