A baby Berkshire Hathaway Inc. (NYSE:BRK.A)
Ashton also likes Fidelity National Financial Inc (NYSE:FNF). This company has virtually the same business model, title insurance and mortgage services as First American Financial Corp (NYSE:FAF) but with a significant twist. This company is also involved in original and after-market electrical components for vehicles. They also own and operate US restaurants: O’Charley’s, Ninety Nine Restaurants, Max & Erma’s, Village Inn, Bakers Square, and Stoney River Legendary Steaks. What?! A motley collection of businesses for a title insurer.
The restaurants division is part of their 55% stake in American Blue Ribbon Holdings which operates 650 restaurants in the US under the aforementioned brands. The Stoney River Legendary Steaks restaurants are part of their 87% stake in J. Alexanders LLC, a high end chain concept. The auto parts division is thanks to a 50.2% stake in Remy International which generates $1.2 billion in annual revenue. Fidelity National Financial Inc (NYSE:FNF) also has a 33% stake in Ceridian Corporation, a business services and payroll management company.
Hmmm…it seems like Fidelity National Financial Inc (NYSE:FNF) may be a baby Berkshire Hathaway Inc. (NYSE:BRK.A) in the making.
Fidelity National Financial Inc (NYSE:FNF) offers a larger yield of 2.60% at a 22% payout ratio and a trailing P/E of 9.63. This is a big cap, however, with a $5.89 billion market cap. It is the biggest US title insurer and brings in $5 billion in annual revenue from its title business alone. Fidelity National is not as global as First American Financial Corp (NYSE:FAF) as its non-domestic business only extends to Guam, Puerto Rico, Canada, and Mexico.
The company reported Q1 results on May 1 that were just as heartening as First American Financial Corp (NYSE:FAF)’s with a record pre-tax title margin gain of 16%, the best number since 2004 for an EPS of $0.39. Happy days in housing indeed!
Fidelity National Financial Inc (NYSE:FNF) is number 472 on the Fortune 500 list and it has a 5% insider hold. This is an intriguing company on its way to being a mini-conglomerate.
First and last…
Remember these financials are undercovered, underowned, and undiscovered until now. If you are interested now may be the time to jump in feet first before the investing community embraces them wholeheartedly. If you believe in the owner-operator thesis then consider First Citizens BancShares Inc. (NASDAQ:FCNCA). Finally, if you need a housing play then First American Financial Corp (NYSE:FAF) or Fidelity National Financial could be your go-to names. Fidelity National Financial Inc (NYSE:FNF) is very interesting and worth some extra due diligence.
The article 3 Financials for a First-Rate Portfolio originally appeared on Fool.com.
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