Markel Corps Private Acquisitions

Markel Corp. (MKL) which is a property and casualty insurance company that specializes in specialty insurance products such as wind and earthquake exposed commercial properties, high valued motorcycles, personal, watercrafts, even horse related risks is becoming more and more like Berkshire Hathaway(BRKA, BRKB) as time passes on. Yesterday Markel announced that it acquired Baltimore-based Ellicott Dredge Enterprises LLC which is a 124-year old maker of Dredges. Markel first stepped into the private equity arena almost 5 years ago buying a major stake in a bakery manufacturer. This is a practice that Warrren Buffett has been doing for over 40 years and is quite successful at it. By buying into private concerns Markel is able to get 80-100% of these smaller companies unlike their passive investments in larger holdings such as General Elecrtic(GE), Wal-Mart (WMT), and Carmax (KMX) . By buying majority stakes of these smaller companies Gayner is counting on double digit returns. As you see by the list below these are simple businesses to understand. It seems Tom Gayner who runs the investment arm of Markel adheres to the same practices as Buffett, which is buying businesses that are simple and that have good management already intact. You will notice that their are no high-tech, fashionable companies in this group.

Private acquisitions since 2005

• Acquires majority stake in AMF Bakery Systems- Located in Richmond Virginia is the world's leading manufacturer of quality bakery equipment for high volume bakeries since 1915.

• Acquires Parkland Ventures- which owns and operates mobile home parks around the country.

• Acquires 40 percent stake in First Market Bank- First Market Bank was founded and is headquartered in Richmond and mostly owned by the Ukrop family who own a chain of super markets in central Virginia. Now celebrating its twelfth anniversary, the bank has grown to more than 300 employees and has a network of 39 full-service locations (including 25 in Ukrop's stores and 14 freestanding branches). It has more than $1 billion in deposits and offers a full range of retail and commercial products including mortgage, trust and investment services. Earlier in the year First Market announced a merger with Union Bankshares Corporation. When the merger is complete the combined organization will have 97 branch locations throughout Virginia with more than $4.0 billion in assets.

• Acquires Panel Specialist- is a leading manufacturer of panels, partitions, wall systems, casework, furniture, and countertops. Their customers include project managers, architects, and builders within five specialized divisions with annual revenues are over 30 million dollars.

• Acquires an unspecified majority interest in Baltimore- based Ellicott Dredge Enterprises LLC- located in Baltimore Maryland has designed and manufactured over 1500 dredges, more than any other manufacturer, and has served customers in over 8- countries. They market their products through two divisions. The Ellicott Division sells pre-engineered standard dredges primarily to the marine contracting and sand and gravel markets. Ellicott Dredge is the only dredge builder which designs and builds all key components of the dredging system- from winches to pumps, from excavators to spud carriages. This concept of single responsibility lies behind Ellicott's reputation for reliable and durable dredges. Because of this approach, many Ellicott dredges are still going strong after 50 years of steady service. Ellicott also built all of the dredges used in the original construction of the Panama Canal.

Markel has over a one hundred and ten publicly traded companies totaling 1.3 billion dollars in its investment portfolio.

A Smaller Version of Berkshire Hathaway: Markel Corporation

3 Mini Berkshire Hathaways???

*Author currently long BRKB, MKL

A Smaller Version of Berkshire Hathaway: Markel Corporation

Markel Corporation markets and underwrites specialty insurance and have been doing business since 1930. They are not a big well known company except in the value investing community. This might be due to them being in a rather boring industry- insurance. Wall Street seems to push everything in vogue and the retail investor seems to follow along. Berkshire Hathaway was not well known either 25-30 years ago, and Warren Buffett had already been involved with Berkshire for nearly 20 years. I must admit when I first heard of Berkshire back in the mid 1980's it was trading around 1500 a share. The only reason I noticed it, was that it had a high price tag or so I thought at the time. Hear it is almost twenty-five years later and another high priced insurance stock has got my attention. Well actually I've known about this one for a few years now. Did I say high priced at $342.00 dollars a share. Well for some of you new folks the stock price does not have anything to do with true value of the company. The reason why you see Berkshire Hathaway(BRKA,BRKB)and Markel(MKL)trading so high is because they don't split the stock, like most companies often do.

As stated in the title Markel Corporation is a smaller version of a Berkshire Hathaway. It operates in the same fashion as well. That is it's primary busi

ness is insurance. Most insurance companies have whats called float. Float is the money taken in (insurance premium) less the claims paid out. The difference or "float" is reinvested in fixed income and equities. Of course we all know that Buffett has been a master of this...taking the float and buying well known financially strong companies such as Coca Cola(KO), Johnson & Johnson(JNJ), Proctor & Gamble(PG), Wells Fargo(WFC) and Kraft Foods(KFT). Markel has also done quite well over the last twenty years by doing the same thing. Since August of 1990 Markel has risen over 2100% while Berkshire has risen over 1500%. Currently Markel is trading at $MKL a share. They have over 132 million per share in cash and a debt/equity ratio .34. Markel has over 70 companies in its portfolio with Berkshire Hathaway(BRKA, BRKB), United Parcel Service(UPS), Diageo(DEO), and Carmax(KMX) being some of the larger holdings.

What others are saying about Markel: 5 Star Stocks Begging To Be Bought

Author currently long as of this writing BRKB,WFC,JNJ,MKL,KFT,KMX

3 Mini Berkshire Hathaways???

For those of you interested in purchasing Berkshire Hathaway stock (BRKA) A shares and (BRKB) B shares which trade at $111500 and $3710 respectively, but do not want to pay the price, here are 3 companies that operate in the same fashion as Berkshire Hathaway hence the title. Markel (MKL), Fairfax (FFH), and Alleghany Corp. (Y) all 3 are insurance companies just like Berkshire. They take the insurance float and invest it in common stock or buy the whole company. All 3 have a portfolio of businesses ranging from railroads to pharmaceuticals with Markel having the most diversified portfolio. All have very competent management in place. All take a value approach to investing. These companies are not in the limelight like Apple(AAPL), Google(GOOG) or Research in Motion(RIMM), so you are probably not familiar but all 3 have prodded along allocating capital (insurance float) into new businesses. It has even been rumored in certain circles that Tom Gayner the Chief Investment Officer of Markel could be in line to run Berkshire. All 3 trade in the triple digits MKL $315, FFH $285, Y $275, but keep in mind folks the price does not have anything to do with the valuation of the underlying business.

I hope this article was some what informative.

STOCKMANMARC