Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Alleghany Corporation (Y): Could This Company Be The Next Berkshire Hathaway Inc. (BRK.A)?

One hundred seventy thousand dollars.

That’s roughly how much one share of Berkshire Hathaway Inc. (NYSE:BRK.A) stock is selling for these days.

Imagine if you had been one of the fortunate few to invest in Warren Buffett’s young company back in 1967, when shares were trading for $20.50. Right now, you would be sitting on a total nominal gain of 829,460%.

But nowadays, Berkshire Hathaway Inc. (NYSE:BRK.A) has, to some degree, become a victim of its own success. Buffett has often said that the company’s current size ($278 billion market cap) has made future growth more difficult.

“Size is the anchor of performance. There is no question about it,” Buffett has said. “It doesn’t mean you can’t do better than average as you get larger, but the margin shrinks.”

Of course, having too much money is a problem most of us would like to have. And I certainly don’t mean to imply that Berkshire is a bad investment.

But it does beg the question — are there any other publicly traded companies that could be the next Berkshire? Are there any companies currently on the market that share Buffett and partner Charlie Munger’s penchant for value investing, long-term holdings, and the use of insurance float to generate big returns?

While many investing firms have sought to imitate Berkshire Hathaway Inc. (NYSE:BRK.A)’s success over the years, I’d like to tell you about one company in particular that’s on track to follow the same path.

Alleghany Corporation (NYSE:Y)

Like Berkshire, Alleghany Corporation (NYSE:Y) is an investment holding company that uses a value-oriented strategy to acquire interests in businesses and equity holdings. And, like Berkshire Hathaway Inc. (NYSE:BRK.A), it generally holds these investments for long-term periods. Through subsidiaries such as RSUI Group, Capitol Transamerica, Pacific Compensation and Transatlantic Holdings, the company sells specialty insurance and property-casualty insurance.

In 2012, the company gained exposure to the reinsurance industry through its acquisition of Transatlantic Holdings. Alleghany Corporation (NYSE:Y) also owns real estate and minority stakes in energy-related companies.

While its $6.4 billion market cap is much smaller than Berkshire Hathaway Inc. (NYSE:BRK.A)’s, Alleghany Corporation (NYSE:Y)uses a similar strategy to generate returns. It collects insurance premiums paid by customers and invests this money (called float) for its own benefit. This is the same strategy that Berkshire has successfully employed for years through such insurance holdings as GEICO and General Re.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.