One of the most successful value investors in the business Tom Gayner joined Markel Corporation in 1990. When he joined the company their stock was worth $20 and since then their price multiplied to the current $1,450. The AUM of the company is also on the rise. He transformed Markel into a company that combines value investing with insurance operations with major success. The Tom Gayner portfolio is valued at $9.5 billion and is composed of 127 holdings.
The two biggest holdings are Class A and B of Warren Buffett’s Berkshire Hathaway, followed by Alphabet. At 4th position is another financial giant Brookfield Corporation. The latest trades include complete exits from Activision Blizzard Ord Shs (BMV:ATVI) and Liberty Broadband Corp Series C (NASDAQ:LBRDK). Also, there are notable increases in LPL Financial Holdings Inc (NASDAQ:LPLA) and Dollar General Corp (NYSE:DG).
Besides his CEO position at Markel Corporation, Tom Gayner is also on the board of directors at Coca-Cola. For more about Gayner’s road to success stay with us. We will go through his Buffett-like approach and further analyze it. We will take a look at his portfolio and try to make some assumptions, which can help us to better understand how he managed to stay on top for over three decades.
Key Tom Gayner Portfolio Holdings
- Berkshire Hathaway Inc Class A (NYSE:BRK.A) with 7.18% of the portfolio
Tom Gayner started trading premium Berkshire Hathaway stocks almost 20 years ago. Back then he piled up major amounts of these valuable stocks while their price was about $133 thousand. Their value multiplied over time to its current price goes over $617 thousand. He owns 1.11 thousand shares and their current worth is $687 million. He invested in this holding $171 million, resulting in a gain of 302%.
- Berkshire Hathaway Class B (NYSE:BRK.B) with 6.55% of the portfolio
The second biggest holding is also from Buffett’s pool of funds. Gayner now has over 1.5 million Class B stocks valued at $627 million. Another long-term investment that goes back to 2010 and it accumulated 177% gains so far. Gayner’s stake cost a total of $227 million and he kept increasing this position from 2015.
- Alphabet Inc Class C (NASDAQ:GOOG) with 4.13% of the portfolio
The last time Gayner traded Alphabet stocks was in 2020 when he slightly increased his share to 2.75 million stocks. At that time the stock was valued at $67 and its current price is $143. Gayner invested $124 million in Alphabet while the value of his holding is $396 million netting a gain of 220%.
- Brookfield Corporation Class A (NASDAQ:BN) with 3.64% of the portfolio
For Gayner’s standards, this is a new holding, which he started trading in Q4 2022. He conducted an initial buy of 8.72 million shares and he is holding the position. He invested $342 million and for now, this investment still has to bear fruit, because the price of stocks is at the same level.
- Amazon.com Inc (NASDAQ:AMZN) with 3.58% of the portfolio
Like most of his big holdings, Amazon is one of the old favorites. His initial investment in Amazon was in 2013 and since then he kept increasing his position. Gayner now accumulated 2.03 million Amazon stocks that are valued at $342 million. He invested just above $100 million, resulting in a gain of 235%.
- Home Depot Inc (NYSE:HD) with 3.5% of the portfolio
Although Gayner has been very active with the Home Depot holding between 2007 and 2014 he eventually sold it. He restarted the holding with a buy of 920 thousand shares in 2015 and has been quiet ever since. HD stocks were then valued at $110 and he bought a stake for $101 million. Today their value jumped to $362 and his entire stake is worth $335. This proved to be a good long-term investment bringing a gain of 230%.
Sector
A major part of Tom Gayner’s portfolio is based in the finance sector, but he still managed to diversify his portfolio into other sectors. His current sector allocation is:
- Finance with 40% of the portfolio valued at $3.83 billion
- Technology with 21.6% of the portfolio valued at $2.07 billion
- Consumer Discretionary with 11.8% of the portfolio valued at $1.13 billion
- Industrials with 11.5% of the portfolio valued at $1.1 billion
- Healthcare with 5.1% of the portfolio valued at $492 million
- Consumer Staples with 5.1% of the portfolio valued at $485 million
- Materials with 1.3% of the portfolio valued at $123 million
- Telecommunication with 0.2% of the portfolio valued at $21 million
- Companies with operations in multiple sectors with 3.1% valued at $299 million.
Markel Corporation
Tom Gayner’s Role & Impact on Markel’s Investment
Tom Gayner has a crucial role in transforming Markel Investments as a whole. His work as a chief investment officer was a cornerstone of their current respected status. When he joined Markel Corporation he worked as an equity investment manager in a company with a market capitalization of $40 million. Today the company’s market cap rose to almost $18 billion.
He implemented Warren Buffett’s method of value investing and often Markel was compared to Berkshire Hathaway.
Key Investments Made By Tom Gayner
Due to his long-term investment horizon, some of the best investments made by Tom Gayner are still part of his portfolio. If we look at the stats, the key investments that he made are:
- Berkshire Hathaway stocks. He has been holding onto them for years. Both Class A and B multiplied in value bringing massive returns
- Home Depot Holding. He started trading Home Depot Stocks for almost 20 years. In that period the stock value quadrupled and his initial investment returned big gains
- Visa stocks. Although not a major holding, his constant investment in it for 15 years brought gains in a range of 250%.
- Microsoft Corporation. Another prime example of long-term investing, which has proven its worth. Although it takes about 2% of the portfolio, trades in the last 15 years created gains closing to a 400% mark.
Tom Gayner Portfolio Performance Analysis
Historical Portfolio Performance
If we take a look at the Markels long time performance history we can see that between 1997 and 2011 the fund generated annual returns of 8.78%. When we take the performance of the S&P 500 index in the same period we get 3.6% annual returns. So in those 15 years, Markel brought 252% returns while the S&P 500 lagged behind with 67% returns.
When we analyze data from the last decade we get 190% returns while in the same time frame, the S&P 500 generated 171.8% returns.
So from the data we can get, since the very beginnings of the Markel Corporation, Gayner has been constantly beating the S&P 500 index. There were some years, like 1999 when the S&P 500 beat Gayner (-10.3% to 19.11% in favor of the index) and 2005 (-0.3% to 3% in favor of the index) but when we take a look at a long time history, Tom Gayner managed to beat the index with flying colors.
Tom Gayner Investment Philosophy & Strategies
Tom Gayner’s investment philosophy and strategy are based on four cornerstones:
- Investing in businesses that have the potential to generate high returns on the capital, and which don’t require significant additional capital
- Opting for companies with talented managers who have integrity
- Like Tom Russo and some other value investors, Gayner prefers companies that can reinvest their earnings
- As a key principle of value investing Gayner is always on the lookout for companies that he can buy below their intrinsic value.
Deriving from these four standpoints Gayner often pointed out that he especially values managers with integrity. He puts that above everything else and notes that he cannot do business with bad people.
Also, he dislikes relying on leverage. On several occasions, high leverage annulled his gains, and he learned his lesson the hard way. As a way to mitigate risk, he aims to invest in companies whose price is for his standards.
Although he would prefer companies with a significant discount, he is willing to pay reasonable money if the company has good fundamentals and a perspective for long-term compoundable returns.
Gayner usually buys and holds his successful investments. He rarely sells holdings that bring solid and constant returns. He points out that selling brings into play taxes which lowers reinvest capital. The only reason to sell a good holding is if he sees an even better opportunity, or if he calculates that the holding has reached its peak.
Take A Look At Tom Gayner: Why Book Value Not Always A Good Measure Of Intrinsic Value:
Future Outlook
In several interviews, Gayner remarked that long-term investors have a much broader playing field. They have much more space to maneuver because most investors are opting for unstable short-term bets. From that, we can take note that he will continue to pursue his current value-investing strategy. When we take a look at his portfolio, the majority of big holdings are there for the long term.
FAQs
What Is the Value of Markel’s Portfolio?
The value of Markel’s portfolio is $9.5 billion. The company portfolio value has been on a steady rise since 2009 with no signs of stopping.
What Companies Does Markel Own?
Currently, Markel has a stake in 127 companies with the most notable being:
- Berkshire Hathaway Class A (NYSE:BRK.A) with 7.18% of the portfolio
- Berkshire Hathaway Class B with 6.55% of the portfolio
- Alphabet Inc Class C with 4.13% of the portfolio
- Brookfield Corporation Class A with 3.64% of the portfolio
- Amazon.com Inc with 3.58% of the portfolio
- Home Depot Inc with 3.5% of the portfolio
- Deere & Co (NYSE:DE) with 3% of the portfolio
- Visa Inc Class A (NYSE:V) with 2.9% of the portfolio
- Novo Nordisk (CPH:NOVO-B) with 2.7% of the portfolio
- Apple Inc (NASDAQ:AAPL) with 2.3% of the portfolio.
Final Thoughts
When Gayner started his career in Markel Corporation he said that he wanted to make a small Berkshire Hathaway from it. And we can say that he succeeded. The company’s two major sectors asset management and insurance are both performing with a steady rise in recent years.
Performance analysis of Markel Corporation shows that both AUM and returns are slowly increasing. This is due to the compounding power of Gayner’s investments, and his steady and patient approach to each investment.
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