Latest news with #TomGayner
Yahoo
26-06-2025
- Business
- Yahoo
Markel Group Inc (MKL): A Bull Case Theory
We came across a bullish thesis on Markel Group Inc on Coughlin Capital by Brian Coughlin. In this article, we will summarize the bulls' thesis on MKL. Markel Group Inc's share was trading at $1,950.52 as of 18th June. MKL's trailing and forward P/E were 14.35 and 14.60 respectively according to Yahoo Finance. A financial analyst presenting a chart of insurance solutions to a boardroom. Markel Group Inc. (MKL), often referred to as a 'mini-Berkshire,' is a diversified insurance holding company with operations across specialty insurance, public and private investments, and a group of non-insurance businesses under Markel Ventures. The company's core insurance segment, which focuses on long-tail excess and surplus lines, has shown consistent underwriting profitability in 8 of the last 9 years, although it has recently underperformed peers, particularly in reinsurance. Markel Ventures, a $5.1 billion revenue segment with a 12.5% EBITDA margin, now contributes 40–50% of overall earnings and spans industries from construction to consumer goods. Despite its strong performance, limited transparency in segment disclosures has raised investor concerns. Meanwhile, Markel's $11.8 billion public equity portfolio—managed by CEO Tom Gayner and featuring high-quality names like Berkshire Hathaway—has trailed broader indices over the past 5–10 years. The company holds $13.1 billion in net investments, or $1,025 per share, representing over half of its market cap, though not all of this is excess capital due to regulatory constraints. Activist investors, including JANA Partners, are pressuring the company to separate its insurance and Ventures arms to unlock value. Management has acknowledged the need to improve insurance results for long-term success. With a conservative intrinsic value estimate of $2,610 per share—versus a current price of ~$1,813—the stock appears significantly undervalued. Capital allocation has become more disciplined, with $8.8 billion deployed into investments since 2021 and an uptick in share repurchases. If insurance performance improves, MKL could see a major rerating, offering investors meaningful upside through multiple value-unlocking levers. Previously we covered a on Markel Group Inc. by Value Don't Lie in May 2025, which highlighted the company's undervaluation, strong performance in Markel Ventures, and potential value unlock through a breakup of its insurance and Ventures segments. The company's stock price has appreciated by approximately 7.5% since our coverage. This is because the thesis partially played out, driven by improved capital allocation and ongoing activist pressure. The thesis still stands as Markel's intrinsic value remains well above its current valuation. Brian Coughlin shares an identical thesis but emphasizes more recent valuation metrics and reinforces the sum-of-the-parts argument amid persistent structural inefficiencies. Markel Group Inc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held MKL at the end of the first quarter which was 38 in the previous quarter. While we acknowledge the risk and potential of MKL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.
Yahoo
07-05-2025
- Business
- Yahoo
Markel Group Inc. (MKL): A Bull Case Theory
We came across a bullish thesis on Markel Group Inc. (MKL) on Substack by Value Don't Lie. In this article, we will summarize the bulls' thesis on MKL. Markel Group Inc. (MKL)'s share was trading at $1813.28 as of April 28th. MKL's trailing and forward P/E were 9.10 and 12.71 respectively according to Yahoo Finance. Is Progressive Corporation (PGR) the Best Low Volatility Stock to Buy Now? A team of accountants in a boardroom, discussing strategic moves of an insurance company. Markel Corporation, often dubbed a 'mini-Berkshire,' is a diversified insurance holding company with three main segments: specialty insurance, public and private investments, and a collection of non-insurance operating businesses called Markel Ventures. Its core insurance business focuses on long-tail excess and surplus lines, consistently generating underwriting profits in 8 of the last 9 years, though it has lagged peers in recent profitability improvements—especially in reinsurance. Markel Ventures, a $5.1 billion revenue operation with a 12.5% EBITDA margin, spans industries from construction services to consumer products and now contributes 40–50% of consolidated earnings. Despite the segment's strong performance, limited financial disclosures raise concerns among investors. On the investment side, Markel's public equity portfolio, managed by CEO Tom Gayner, grew to $11.8 billion by 2024 and includes high-quality names like Berkshire Hathaway. However, it has underperformed broader market indices by 100–150 basis points over 5–10 years. With $13.1 billion in net cash and investments—or $1,025 per share—this sum makes up over half of Markel's market cap, although not all of it is excess capital due to regulatory requirements. The stock's underperformance has caught the attention of activist investors, including JANA Partners, who have urged a separation of the insurance and Ventures businesses to unlock value. Markel's management has acknowledged areas needing improvement, particularly insurance, stating that improved results here are essential for the company's long-term potential. Capital allocation has shifted significantly in recent years. After spending $4.2 billion on acquisitions between 2015–2021, Markel deployed $8.8 billion into its investment portfolio since 2021. Share buybacks have also increased meaningfully, reaching $573 million in 2024—though still modest relative to its $23 billion market cap. Valuation remains a core topic. Markel uses a two-part intrinsic value estimate based on operating earnings and net asset value, applying a conservative 12x multiple to normalized earnings. As of year-end 2024, this approach yielded an intrinsic value of $2,610 per share, up 18% CAGR over five years, versus just a 9% CAGR in stock price. Alternatively, with $1.94 billion in earnings and $13.1 billion in net investments, the stock trades at an implied 5.1x multiple, suggesting meaningful undervaluation. With operational tailwinds in Ventures, strategic pressure to unlock asset value, and visible capital deployment into buybacks, Markel presents a compelling investment opportunity with multiple levers for upside if execution improves—especially in insurance.
