Tom Gayner’s Markel’s Top Stock Picks Include Berkshire Hathaway Inc. (BRK.B)

The fund had 1.2 million shares of Diageo plc (ADR) (NYSE:DEO) in its portfolio at the end of Q1. The alcoholic beverage company, whose brands include Johnnie Walker and Crown Royal, has been recording high earnings growth numbers though improvements on the top line have been more modest; we’d generally take growth derived from much higher net margins as not sustainable. Still, given where the stock is currently trading moderate growth could make Diageo plc (ADR) (NYSE:DEO) attractive. Billionaire Mario Gabelli’s GAMCO Investors owned about 700,000 shares according to its own 13F (find Gabelli’s favorite stocks).

Brookfield Asset Management Inc. (USA) (NYSE:BAM) was another of Markel’s top picks with the filing disclosing ownership of 3.1 million shares. The $23 billion market cap company develops real estate, produces power, and invests in private investment funds among other activities. It is also valued at something of a premium to book value; with the sell-side forecasting a decline in earnings per share in 2014, it trades at 30 times forward earnings estimates which seems a bit high to us. Third Avenue Management, managed by Marty Whitman, reported owning 5.9 million shares of Brookfield Asset Management Inc. (USA) (NYSE:BAM) (research more stocks Third Avenue owned).

Gayner and his team had Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) among their top picks as well. Fairfax is managed by Prem Watsa, a value investor who has become known as “the Warren Buffett of Canada.” See which stocks Fairfax owned in its most recent 13F. Markets are considerably less faithful in Watsa than they are in Buffett, however: the price-to-book ratio here is 1.1, so while the stock is priced at a small premium to book the premium is not nearly as high as it is at Berkshire Hathaway Inc. (NYSE:BRK.B). Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) has paid a $10 per share annual dividend each of the last four years, for a yield of 2.5%.

Disclosure: I own no shares of any stocks mentioned in this article.