Markel (MKL): A Compounding Machine

Posted on 42 CommentsPosted in Industry-Insurance, Investment Ideas & Company Research

“Our financial goals are to earn consistent underwriting profits and superior investment returns to build shareholder value” – Markel 2013 Annual Report Markel is an outstanding business currently in its 85th year of operations. It is an excellent insurance company with a history of underwriting profits. It is also a superb investment company with a history of above average investment returns. Markel had an outstanding year in 2013, basically doubling the size of its insurance business and investment portfolio in […]

An Exercise on Thinking Differently and a Great Business

Posted on 15 CommentsPosted in Case Studies, Investment Ideas & Company Research, Think Differently

I came across an excellent presentation that I wanted to share because it sparked some thoughts. It is not about a current—or even prospective—investment, but one that exemplifies the art of thinking differently. I spend a fair amount of time reading annual reports about businesses that I have no intention of owning. Typically, these businesses are high quality companies that—although maybe too expensive to offer attractive investor returns—are great entities to study and learn about. Studying businesses that have a […]

Wells Fargo vs. Small Community Banks

Posted on 12 CommentsPosted in Case Studies, General Thoughts, Industry-Banks, Investment Ideas & Company Research, Think Differently, Warren Buffett

Charlie Munger once said that he compares every possible investment to Wells Fargo… Why buy company X if it’s not as good/cheap as WFC?  For weeks I’ve been slowly and steadily working my way through hundreds of small community bank stock filings looking for bargains. A good friend of mine lately has been the trusty old FDIC website where you can find current/historical financials on banks to your heart’s content… But after a few more hours of sifting through Call Reports […]

Coach (COH): An Overview of the Numbers

Posted on 18 CommentsPosted in Investment Ideas & Company Research

I was reading the news one morning last week and noticed that Coach reported earnings that disappointed and the stock was off 8%. I’ve never really looked at Coach and don’t know much about the company, but I glanced at some of the numbers and was impressed by how strong the business appears to be. Although I prefer investing in stocks that are cheap and obviously undervalued, I’m always looking at great businesses to study them and learn more about […]

Markel (MKL) is a Compounding Machine

Posted on Leave a commentPosted in Investment Ideas & Company Research, Investment Philosophy, Shareholder Letters & Reports, Superinvestors

A couple weeks back I wrote a quick post on Tom Gayner, who is an outstanding investor and head of Markel (MKL), one of my favorite companies in America. Markel is a well run insurance company that has been compounding shareholder equity consistently at about 16% per year over the past 20 years. MKL operates with a similar business model to that of Berkshire Hathaway: Write insurance policies to collect premiums Invest the float Insurance companies make money in those […]

Check Point Software (CHKP) is a Free Cash Flow Machine

Posted on 5 CommentsPosted in Investment Ideas & Company Research

One of the things Buffett consistently refers to when evaluating the quality of a business is the amount of cash it produces relative to the amount of cash it needs to maintain the business. Buffett calls this cash flow that is produced “owner earnings”, which is basically free cash flow. Buffett defines owner earnings as the cash flow a business produces less the capital expenditures a business has for maintaining the business (he excludes growth capex). Free cash flow is […]

Finding Value in 4 Big Cap Tech Stocks

Posted on 2 CommentsPosted in Investment Ideas & Company Research

In the process of scanning the investment landscape to find value amidst the all time highs for the indices, I’ve noticed that a number of big cap tech stocks are priced at low valuations relative to their earnings and free cash flow, measured on an absolute basis and relative to their own historical valuations. Some of these stocks are producing huge amounts of free cash flow and are paying (and growing in a few cases) their dividends. These are good companies […]

Couple Thoughts on Wells Fargo (WFC)

Posted on Leave a commentPosted in Investment Ideas & Company Research

I was reading one of my favorite blogs that I just only recently discovered called Brooklyn Investor. He does a great job at doing thorough analysis on companies, and some of the posts are good case studies to learn from. He had a couple posts last week on Wells Fargo (WFC), which I found interesting. Of course, WFC is one of the top 4 largest banks in the country, and with a market cap just shy of $200 Billion, it’s […]

Top 25 Compounders that are Cheap; & Some Thoughts on Investment Process

Posted on 4 CommentsPosted in Investment Ideas & Company Research, Investment Philosophy

Investors use all kinds of inputs to make investment decisions. When looking for individual stocks to buy, “bottom up” investors use balance sheet, income statement, and cash flow data to make decisions on whether or not to buy the stock in question. Over the years my investment strategy has shifted to focus more on balance sheet numbers. Probably half of my screens and scans revolve around cheapness relative to assets, and the other half still use multiples of earnings/cash flow/sales, etc… […]

Jos. A Bank at a 2-year Low & Some Thoughts on Momentum vs Mean Reversion

Posted on 3 CommentsPosted in Investment Ideas & Company Research, Investment Philosophy

I was going through my daily routine of looking through stock lists and scans, and one of the lists I like to watch is the 52 week low list. Buffett and Walter Schloss have both said that they look at this list each and every day, so I thought it would be good to copy that part of their routine. However, I will mention a few warnings to heed if anyone wants to use this list as a watchlist. There […]