Summary
- Markel is basically a "Mini-Berkshire" due to similar business models, and both companies have the same shareholder return over the last two decades which is significantly better than S&P 500.
- Markel has an excellent track record in both investment skills and underwriting, although book value growth has declined over the last two decades.
- The new segment, Markel Ventures, is growing in importance. I look at performance.
- Berkshire is too big to take on smaller family-run businesses, while Markel is not. And the outperformance of small-caps is well documented empirically.
- Markel is a compounder with a long runway, and I add on pullbacks. By owning Markel, you indirectly also own Berkshire. Berkshire is by far Markel's biggest equity investment.
Background for analysis and conclusion
My goal is compounding, and thus, my ideal investment horizon is at least a decade, preferably an investment that I can just hold and never sell, and the article is based upon that. Most investors are bad at selling, and this applies to me as well. I prefer companies that pay a growing dividend, but occasionally I make exceptions (Markel being one of these), and I stick to investments in beer-drinking countries.
The aim of this article is to present why I'm long Markel (MKL) (instead of Berkshire (BRK.A, BRK.B)), and why I believe Markel will deliver above market returns for the next decade(s).
