Markel Gayner Asset Management is the investment division subsidiary of Markel Corp. and is headed up by Tom Gayner, who also spends his time as the CIO of Markel. The fund is directed by the SEC to release its holdings every quarter in a document known as a 13F filing. We look forward to the release of these filings, as we use them to create proprietary, retail-friendly strategies that have proven to beat the market in real-time (read about our small-cap strategy that has netted 29% in the past six months here). See below for our take on the five largest new positions initiated by Gayner in the fourth quarter of 2012.
Premium subscription media provider Starz (NASDAQ:STRZA) received a $1.4mm dedication from Markel Gayner. The entertainment channel was recently spun off from Liberty Media Corp (NASDAQ:LMCA), with previous shares of LMCA renamed as STRZA shares. New shares were then generated under the LMCA ticker at the end of January. STRZA has already returned an incredible 53% to investors so far this year. Last month, Sony extended its movie-licensing deal with Starz (NASDAQ:STRZA) until 2021, which is estimated to be valued at $300mm annually. Billionaire Paul Tudor Jones of Tudor Investment Corp purchased 2,500 shares last quarter as well (take a look at his top five stocks here).
Bunge Ltd (NYSE:BG) took the third spot in terms of capital allocated to new purchases, earning $700,000 from the fund. The $11bn agribusiness and food company reported Q4 2012 results at the beginning of last month, unveiling a huge disappointment amounting to 76% below expectations. The stock plunged over 9% on the news, undoing some of the double-digit returns it had achieved going a year back. Bunge Ltd (NYSE:BG)’s operations and prosperity suffer when commodity prices decline; weather and currency exchange rates also have a significant impact. Billionaire Ken Griffin of Citadel Investment Group reduced his call position in BG according to his latest 13F (check out his favorite stocks here).
Continue reading to see the fund’s other latest purchases.
Arch Coal Inc (NYSE:ACI) was another resource play of Gayner’s with an apportionment of almost half a million dollars. The second largest coal producer in the US has had a rough start to 2013, losing almost 30% since the turn of the year. On a more positive note, the stock carries a dividend yield of nearly 2%. Negative earnings were speckled amongst a few positive announcements in 2012; the most recent release on the fifth of last month revealed another disappointment, surprising analysts with a 200% larger loss than expected. ACI is hoping that increased demand abroad will help pad its bottom line in 2013, which saw deterioration after weakened manufacturing, a mild winter, and increased use of alternative energy took their toll this past year. Billionaire Glenn Russell Dubin of Highbridge Capital Management initiated both equity and options positions last quarter (see his other positions here).
Resolute Forest Products Inc (NYSE:RFP) was Markel Gayner’s last new purchase that we’ll cover; the fund devoted $238,000 to the stock in Q4 2012. RFP is a global forest products company, as its name implies, producing paper, pulp, and wood products. Twenty-one out of the 400+ hedge funds we track claimed ownership of RFP in the fourth quarter of 2012 (this is compared to seventeen a quarter prior). The company gave an earnings beat on the twelfth of last month, although revenues came in at slightly less than expected. RFP’s return spanning the previous twelve months came in at 22 percentage points under the return of the S&P 500. Billionaire Louis Bacon of Moore Global Investments invested nearly $1mm in RFP this past quarter (view the fund’s full holdings here).
Gayner’s stock picks are mostly unloved stocks. The most popular stock in this group is Arch Coal (ACI) which is a risky investment. Our favorite pick among these five stocks is Resolute Forest Products that recently started to take off. We have confidence in management which announced a large stock buyback last May and RFP returned 45% since then. Gayner’s stock picks aren’t for every investor. If investors don’t want to do the leg work and research these companies, their best alternative is to buy Markel’s stock.
Disclosure: I do not own shares of any stocks mentioned in this article.
