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Should You Be Tempted To Sell Markel (MKL) Stock

Giverny Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. You should check out Giverny Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Giverny Capital highlighted a few stocks and Markel Corp (NYSE:MKL) is one of them. Markel is a financial holding company serving a range of markets. Year-to-date, Markel Corp (NYSE:MKL) stock lost 20% and on May 22nd it had a closing price of $868.85. Here is what Giverny Capital said:

“Markel Corp. is an insurance company very much modeled on the example of Berkshire Hathaway. Like Berkshire, it has a stellar record of investing its profits and float, the premiums it holds in cash as it waits to pay future claims. This investing prowess in turn provides it with more capital with which to grow its insurance operations. At year-end, Markel’s equity portfolio included more than $7.5 billion of good-quality stocks – sadly, their quoted prices are a lot lower today. Markel’s investments, including a large bond portfolio, threw off more than $450 million last year in interest and dividends alone. At a recent share price of about $800, the interest and dividends alone represent a 4% yield on the stock.

In recent years, Markel has started buying whole businesses – much like Berkshire – and today it generates $2 billion in revenue from a dozen wholly-owned businesses inside Markel Ventures. There is some risk these smaller businesses could be damaged by a prolonged recession. But Markel has four income streams: insurance underwriting; dividends and interest from its investments; income from Ventures; and capital gains from its stock portfolio. Importantly, we do not believe Markel has significant underwriting exposure to business interruption or event cancelation insurance.”

Market Crash

In Q4 2019, the number of bullish hedge fund positions on Markel Corp (NYSE:MKL) stock increased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with MKL’s growth potential. Our calculations showed that Markel Corp (NYSE:MKL) isn’t among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.

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