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Markel Corporation (MKL) Puts Its Money Where Its Mouth Is

If you’ve read some of my musings here at the Fool, you’re probably aware I have no qualms extolling the virtues of Markel Corporation (NYSE:MKL). In fact, in late April, I even went so far as explain why I favor holding Markel for its future upside potential over the company’s much larger, world-dominating counterpart in Berkshire Hathaway Inc. (NYSE:BRK.A).

Markel Corporation (NYSE:MKL)

Of course, by owning shares of Markel Corporation (NYSE:MKL), investors indirectly own a piece of Berkshire Hathaway Inc. (NYSE:BRK.A), too. Remember, Warren Buffett’s company so happens to be the single largest holding in Markel’s own equity portfolio, which is managed by the company’s president, CIO, and renowned value investor, Tom Gayner.

In any case, it turns out I’m certainly not alone in my fondness for Markel Corporation (NYSE:MKL) from an investment perspective, anyway.

To be sure, in a recent SEC filing in which Markel Corporation (NYSE:MKL) released the latest details of its employee retirement savings plan, one investment option stands out from the rest:

Investment Type Fair Value (as of 12/31/2012) % of Total
Markel common stock $72,513,051 27.90%
Blended mutual funds $69,120,113 26.59%
Large cap mutual funds $64,312,459 24.74%
Short-term investment funds $17,194,918 6.62%
Bond mutual fund $17,132,868 6.59%
Mid/small cap mutual funds $11,231,055 4.32%
International mutual funds $8,412,721 3.24%
Total investments: $259,917,185 100%

Markel Employee Retirement Account Plan investments, Source: Markel SEC Form 11-K filing, page 8

Though blended mutual funds put up quite a fight last year, Markel Corporation (NYSE:MKL) common stock once again walked away unscathed as Markel employees’ retirement vehicle of choice, representing nearly 28% of the value of all investments in the plan.

What’s more, it’s also worth noting the 167,303 shares collectively held by Markel Corporation (NYSE:MKL)’s roughly 6,400 employees equates to more than 1.73% of Markel’s 9.63 million total shares outstanding.

So what does this tell us?

Markel Corporation (NYSE:MKL)The downside
First, while it’s fairly obvious a significant number of Markel Corporation (NYSE:MKL) employees believe strongly in the longevity of their company, most of us would be wise to remember it’s generally not a great idea to over-saturate our own retirement portfolios with a single investment. This is especially apparent when that investment happens to be the stock of our own employer, where our “insider” perspectives may tend to provide a false sense of confidence in the businesses that enable us to pay our bills.

On a more encouraging note, though — depending on how you look at it, anyway — while Markel Corporation (NYSE:MKL)’s employee stock ownership levels were still impressive at the end of 2012, the numbers were even more disparate in 2011, at the end of which Markel employees owned 171,766 common shares, or more than 4,000 more shares than at conclusion of last fiscal year. When all was said and done in 2011, Markel stock represented more than 31% of the total value of Markel’s retirement account plan.

It would appear, then, at least some aspiring Markel Corporation (NYSE:MKL) retirees took the opportunity to rebalance their accounts in 2012.

The silver lining
That said, as a shareholder myself, I certainly can’t blame Markel employees for their continued spate of long-term optimism.

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