CorpRaider Posted May 2, 2016 Share Posted May 2, 2016 Neat. Do they have all three co-ceo's, the ceo and both Markels (vice chairmen?) hold forth or does Gayner get to do the bulk of the talking? Link to comment Share on other sites More sharing options...
EricSchleien Posted May 3, 2016 Share Posted May 3, 2016 No clue! This will be my first. Link to comment Share on other sites More sharing options...
Guest neiljgsingh Posted May 3, 2016 Share Posted May 3, 2016 Neat. Do they have all three co-ceo's, the ceo and both Markels (vice chairmen?) hold forth or does Gayner get to do the bulk of the talking? If it's anything like the meeting they had in Omaha, they'll all be there. Gayner takes most of the questions, though. Link to comment Share on other sites More sharing options...
CorpRaider Posted May 3, 2016 Share Posted May 3, 2016 Neat. Hope you guys all enjoy. Hope to join you in the future. Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 3, 2016 Share Posted May 3, 2016 Please share some notes if you're taking some. Thank you! Link to comment Share on other sites More sharing options...
Guest neiljgsingh Posted May 3, 2016 Share Posted May 3, 2016 Please share some notes if you're taking some. Thank you! Didn't take heavy notes, but a few quotes/thoughts from Tom Gayner in Omaha (apologies if these aren't verbatim): "You get good judgment by learning from mistakes, which comes from bad judgment." "A pancake, no matter how thin, has two sides" (regarding Buffett and Munger's comments that reinsurance will be a tougher business these next 10 years than it was over the past 10). "Markel is a private company that happens to be publicly traded" (regarding their culture, the feel of the firm, their interaction with managers; very BRK-esque). Spoke highly of companies with similar business models, and noted they have positions in a number of them: BRK, Y, RLI, FFH "You don't go to church every week to learn something new–you go to reinforce what you already know (and sometimes you pick up a few new things)" (regarding making the pilgrimage to Omaha every year). Spent a while talking about reinvestment opportunities over the long-haul. Basically said you should pay a different multiple for a company that's able to reinvest its earnings at a good rate of return than you should for a company that will end up resorting to buybacks/dividends to create value (mainly due to its size). I think this was in regards to BRK (a large position for them) being so big, as well as AAPL slowing down. A simple topic, but like he said, it always helps to reinforce these ideas. Church dismissed! Link to comment Share on other sites More sharing options...
winjitsu Posted May 4, 2016 Share Posted May 4, 2016 By the way, Gayner did another interview on VII: http://www.valueinvestorinsight.com/pdfs/TrialAPR2016.PDF I would download while you can :) Link to comment Share on other sites More sharing options...
Agrippa07 Posted May 4, 2016 Share Posted May 4, 2016 I didn't take full notes either, however here are some other things that were mentioned and stood out: On their experience with acquiring companies: 'When acquiring companies, acquiring one that is fully operating and running is easier/better than acquiring a growth company with lots of potential as it's hard to expand (growth pains).' BRK Reinsurance business: 'Reinsurance niche for BRK has been getting smaller and more competitive, current margin is now for e.g. 1.5x instead of 2x. The importance of recognizing the difference between commission and omission mistakes. Book Recommendation: Creativity inc - Ed Catmull Link to comment Share on other sites More sharing options...
merkhet Posted May 4, 2016 Share Posted May 4, 2016 I really enjoyed his explanation of how they got comfortable with the economics of Amazon, Facebook, etc. "We guess!" Link to comment Share on other sites More sharing options...
racemize Posted May 4, 2016 Share Posted May 4, 2016 I really enjoyed his explanation of how they got comfortable with the economics of Amazon, Facebook, etc. "We guess!" Can you give some context on it? Did I miss a post? Link to comment Share on other sites More sharing options...
CorpRaider Posted May 4, 2016 Share Posted May 4, 2016 What does the reinsurance pancake metaphor mean? They are buying RE coverage rather than writing it? Link to comment Share on other sites More sharing options...
jtvalue Posted May 4, 2016 Share Posted May 4, 2016 By the way, Gayner did another interview on VII: http://www.valueinvestorinsight.com/pdfs/TrialAPR2016.PDF I would download while you can :) Wow - according to interview he recently initiated core positions in AMZN, GOOG, and FB. Not sure how I feel about that Link to comment Share on other sites More sharing options...
AJDelphi Posted May 4, 2016 Share Posted May 4, 2016 I understood the pancake comment to mean that reinsurance might be a tougher business in the next 10 years, but it is probably still a REALLY good business for Berkshire. Buffett just isn't going to come out and say that. You don't really want to tell anyone how good it is. Link to comment Share on other sites More sharing options...
merkhet Posted May 4, 2016 Share Posted May 4, 2016 I really enjoyed his explanation of how they got comfortable with the economics of Amazon, Facebook, etc. "We guess!" Can you give some context on it? Did I miss a post? One attendant asked a question about how they value companies, and Tom Gayner said one way to do that is to look over the last ten years and decide how similar things are to the next ten years. The next attendant asked "How do you do that for companies that have fewer than ten years' history like some of the tech companies?" His response is that they sort of have to guess at the economics of these businesses. Over time, as you get more information, you use Bayes Theorem and adjust your views accordingly. I like it because I found it refreshingly honest. You see a lot of people come up with these intricate measures of Facebook's or Amazon's intrinsic value based on margins predicated on assumptions that, frankly, are guesses. This isn't necessarily a terrible way to do things, but it would behoove people to remind themselves that, they are, at best, still guesses. Link to comment Share on other sites More sharing options...
Poor Charlie Posted May 4, 2016 Share Posted May 4, 2016 Link to MKL Omaha meeting notes - https://www.dropbox.com/s/7gh3j9g02l398gp/Phil%20Weiss'%202016%20Markel%20Omaha%20Meeting%20Notes.pdf?dl=0 Link to comment Share on other sites More sharing options...
LongTermView Posted May 4, 2016 Share Posted May 4, 2016 I recall Gayner mentioning something about certain parts of tech being winner take all and some tech companies having young leadership that should stay in place for years to come. Link to comment Share on other sites More sharing options...
CorpRaider Posted May 4, 2016 Share Posted May 4, 2016 Yeah I don't know about buying those tech names here. To me, if you are just a value investor/finance guy, not a tech guy with some special competency and you weren't smart enough to buy MSFT back when you saw lotus 123 bite the dust, you may not know wtf you are doing now. I don't see any Y in their portfolio as of last time they filed... I wish one of these Berk-alikes would just use the S&P 500 or something for their equity allocation and then just make sure to focus on doing a good job in insurance and benefitting from the float and uncorrelated insurance and investment returns and ability to allocate capital based on the opportunities. I know RLI allocates there, but my understanding is that they don't really grow and maintain the float/leverage with the portfolio appreciation. One of you guys start that up or get those lancashire former guys to do it. None of this hedge fund or stock picking BS. Link to comment Share on other sites More sharing options...
Jurgis Posted May 4, 2016 Share Posted May 4, 2016 Not a bad thought. Could even be coupled with MKL's Graham-y variations of 50% to 80% of equity allocation in their equity slice. Or not. Both should be pretty good perhaps. Link to comment Share on other sites More sharing options...
CorpRaider Posted May 4, 2016 Share Posted May 4, 2016 You mean scale up the equity exposure or down given market valuations versus fixed income or insurance opportunities? Yeah that could work, it would give them something to talk about at least... Yeah I'm surprised no one has done it (or even a CEF with some preferred/leverage of like 1.3x an index, pimco has on that does futures and a fundamental index but it always trades at insane premium to book). Didn't AQR claim that the float was the source of Buffett's alpha? I don't buy that but it still might be a damn sight better than most things post Buffett. Much preferred by this guy to Einhorn or Loeb's re-insurers. One of you rich guys take over RLI or LRE.L and make it happen. Link to comment Share on other sites More sharing options...
vinod1 Posted May 4, 2016 Share Posted May 4, 2016 I wish one of these Berk-alikes would just use the S&P 500 or something for their equity allocation and then just make sure to focus on doing a good job in insurance and benefitting from the float and uncorrelated insurance and investment returns and ability to allocate capital based on the opportunities. I know RLI allocates there, but my understanding is that they don't really grow and maintain the float/leverage with the portfolio appreciation. Good point. Even Fairfax with their outstanding investment track record, only added 1.38% by my calculations over the entire period from 1986 to 2014, excluding the CDS gains. Their portfolio as a whole (stock, bonds, cash) grew at 6.12% compared to 4.74% if invested in an appropriate index. Vinod Link to comment Share on other sites More sharing options...
Jurgis Posted May 5, 2016 Share Posted May 5, 2016 You mean scale up the equity exposure or down given market valuations versus fixed income or insurance opportunities? Yeah that could work, it would give them something to talk about at least... Yep. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 5, 2016 Share Posted May 5, 2016 I wish one of these Berk-alikes would just use the S&P 500 or something for their equity allocation and then just make sure to focus on doing a good job in insurance and benefitting from the float and uncorrelated insurance and investment returns and ability to allocate capital based on the opportunities. I know RLI allocates there, but my understanding is that they don't really grow and maintain the float/leverage with the portfolio appreciation. Good point. Even Fairfax with their outstanding investment track record, only added 1.38% by my calculations over the entire period from 1986 to 2014, excluding the CDS gains. Their portfolio as a whole (stock, bonds, cash) grew at 6.12% compared to 4.74% if invested in an appropriate index. Vinod 6.12% is 29% higher than 4.74%. It's not 100% higher, but 29% is not meaningless. It may be that they can't repeat it going forward, or perhaps they will do worse than markets going forward, but so far it appears to have been worth it. It is unclear going forward that their underwriting would improve if their float were invested in index funds. Fire HWIC and the underwriting gets way better as a result? I thought the people involved in underwriting were different from the HWIC people, so how does that work? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted May 5, 2016 Share Posted May 5, 2016 I wish one of these Berk-alikes would just use the S&P 500 or something for their equity allocation and then just make sure to focus on doing a good job in insurance and benefitting from the float and uncorrelated insurance and investment returns and ability to allocate capital based on the opportunities. I know RLI allocates there, but my understanding is that they don't really grow and maintain the float/leverage with the portfolio appreciation. Good point. Even Fairfax with their outstanding investment track record, only added 1.38% by my calculations over the entire period from 1986 to 2014, excluding the CDS gains. Their portfolio as a whole (stock, bonds, cash) grew at 6.12% compared to 4.74% if invested in an appropriate index. Vinod 6.12% is 29% higher than 4.74%. It's not 100% higher, but 29% is not meaningless. It may be that they can't repeat it going forward, or perhaps they will do worse than markets going forward, but so far it appears to have been worth it. It is unclear going forward that their underwriting would improve if their float were invested in index funds. Fire HWIC and the underwriting gets way better as a result? I thought the people involved in underwriting were different from the HWIC people, so how does that work? Only 1.38% per year for 30 years? What do you mean only? That makes a massive difference. $10,000 compounded at 4.74% for 30 years is $40,121 The same amount compounded at 6.12% is $59,417 - a near 50% difference in your ending amount. That's a massive difference - anyone who thinks otherwise is welcome to remit 1/3 of your final retirement savings to me if you don't think that extra 1.38% for 30 years is significant. Link to comment Share on other sites More sharing options...
Broeb22 Posted May 5, 2016 Share Posted May 5, 2016 CorpRaider, Such a company exists. The company's name is W.R. Berkley. A significant portion of their investments are an allocation to indices. Link to comment Share on other sites More sharing options...
CorpRaider Posted May 5, 2016 Share Posted May 5, 2016 It is a significant outperformance but with the passive option you don't have the risk someone blows their record up going to FB, making macro bets on deflation, just gets old and looses "it", the brains of the operation dies and they go off the rails (like Sequoia), etc... I didn't meant to imply it would have an impact on the underwriting side, just would want to be paired with that capability to get "negative interest" leverage. I guess you could argue you need a non-insurance guy to rationally allocate the capital to writing insurance or buying equities. I wonder if the 1.38% holds up compared to a simple value index? Sounds like that is in the range of Fama's value "anomaly." Just thinking if you take the investing excellence/talent out of the equation you have to be good/exceptional/rational in at least one less area. Thought that the question was just sort of begged by Buffett's "Sermon on the Dais." Sorry to muck up the MKL thread. Thanks Broeb. They seem to be bragging about the P/E and "alternatives" exposure in recent Chairman's letter, but I will check it out. Link to comment Share on other sites More sharing options...
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