Posted on August 31, 2018
Markel (MKL) has been a compounding machine for over three decades now.
Book value and share price have mimicked each other roughly throughout the history of the company being public. This is to be expected since it mainly focused on specialty property and casualty insurance for most of its life – and insurance companies are normally valued at price to book value per share. Something changed in 2005, Markel started Markel Ventures, which is basically a private equity arm of Markel and the reason why Markel has been given the name “‘Mini Berkshire Hathaway”. As the company slowly accumulates other businesses outside of the insurance business, the price to book value per share isn’t quite the best valuation metric anymore. Some investors might think Markel is overvalued now trading at 1.78x book. I would argue its fairly priced or underpriced when compared against the S&P 500 because of three reasons. The growing non-insurance segment, the underwriting insurance discipline the company has displayed since becoming public, and a leader that is a proficient capital allocator Tom Gayner.
READ FULL ARTICLE HERE
