Markel FY 2014 numbers are excellent!

February 19th, 2015 Comments off

Markel Corp. (NYSE: MKL) released excellent FY 2014 numbers!
(The transcript of the conference call as always has been published by Seeking Alpa)

What was arguably the most important information of this earnings release?
The integration of the acquired Alterra group has been successfully completed!

This reflects in certain key numbers:
Total operating revenues grew 19%, surpassing the $5 billion threshold for the first time.
„The most significant drivers of this increase continue to be the inclusion of a full-year of underwriting revenues from legacy Alterra product offerings in 2014, higher revenue from the Hagerty business, and higher investment income due to our larger investment portfolio“ as CFO Anne Waleski explained on the call.

Net written premiums for 2014 were approximately $3.9 billion, up 21% from the prior year.
Markel’s consolidated combined ratio improved to 95% compared to 97% in 2013.
Book value per share, the most important metric in the insurance industry rose 14% to $543.96 at December 31, 2014.

Excellent results, aren’t they? … but wait, have a look at the investment results:

„In our equity portfolio we earned 18.1% in 2014 compared to the 13.7% return on the S&P 500.
In our fixed income operations, we earned 6.5% and fulfilled our goals from fixed income investment of earning a positive spread on the insurance funds we hold and protecting the balance sheet against credit losses, as well as the possibility of rising interest rates“ CIO Thomas Gayner explained. „More important in the returns of anyone here though is the fact that over the last 25 years we’ve earned over 200 basis points more than the S&P 500“.

The only still difficult beast is Markel Ventures, their rather new private equity unit.
Total revenue from the division climbed 22% to $838 million, while EBITDA hit $95 million
The profitability could be higher but perhaps we just have to give them more time to develop this division.

Until today Markel’ share price rose more than 6% to $ 749.
This translates into a price/FY 2014 book ratio of 1.4 which is slightly over the long term price range of Markel.
Patient investors could wait for a correction in order to buy a part of this high quality insurance company!

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Markel reports very good Q4 and FY 2014 results

February 12th, 2015 Comments off

Markel Corp. (NYSE: MKL) reports Q 4 and FY 2014 results. Have a look!

Book value per common share outstanding improves 14% from $477.16 at December 31, 2013 to $543.96 at December 31, 2014!

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Colfax Q4 2014 – Good execution in a still sluggish environment

February 6th, 2015 Comments off

Colfax Corp. (NYSE: CFX) reported Q4 2014 net sales of just over $1.2 billion, an increase of 3% over the same period last year.

13% growth came from acquisitions offset by a negative 7% impact from foreign exchange and a 3% organic decline in revenues.

Adjusted EPS for the 2014 fourth quarter was $0.72 per share which represents an 18% increase versus the $0.61 per share reported last year.

The Conference Call Transcript as always is provided by Seeking Alpha.

There were positive news as p.e. the improved operating margin of 13.7% in the gas and fluid handling segment, but at the same time in their largest gas and fluid handling end market, power generation, revenues for the quarter decreased by 10% organically, while orders were off by 16% organically.

Better news came from the general industrial end market, where sales increased 7% organically and orders increased by 4% organically.

As CEO Steve Simms pointed out: „while the fourth quarter results included excellent execution and working capital management and strong margins in gas and fluid handling, we were again hampered by a sluggish demand environment resulting in an organic revenue decline for the full-year of 2014.“

And they „expect 2015 to be another year without revenue growth, but with continued margin improvement.

But the most interesting point came at the end of the prepared remarks: Steve Simms gave a clear hint that Colfax is already examining acquisition candidates. Only the due diligence process takes more time than anticipated: „we expect to announce a number of strategically compelling and financially attractive situations in the late second quarter or early third quarter of 2015.“

That’s Colfax!

Don’t forget that part of their business model is to grow by the successful integration of acquired companies.

So let’s hope that this will not be in the heavy industries segment where they always will depend of a few large orders.

Colfax stock at this price level remains a buy!

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Colfax reports Q4 and FY 2014 results

February 5th, 2015 Comments off

Colfax Corp. (NYSE: CFX) the industrial manufacturing and fluid handling company today reported Q4 and FY 2014 results.

Adjusted EPS came in at $0.72, 8 cents better than analyst expectations. Revenue came in slightly lower than expected.

We will have a look at the conference call transcript to get more information, especially about the “acquisition pipeline” mentioned 3 months ago!

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2014 comes to an end! Happy Christmas and a Happy New Year 2015!

December 22nd, 2014 Comments off

2014 comes to an end in a rather turbulent manner.

Shares are beaten down after the rapid slide of the oil price. Even shares of companies which profit from cheaper oil are beaten down highlighting how hysteria and speculation are influencing markets in these days.

Let’s keep calm! The most important is not to sell on panic but to stay in for the long term.

One of our long term holdings Colfax Corp. (NYSE: CFX) held its investor day on dec. 16th

The company issued guidance for 2015 below expectations seeing EPS of $2.20-$2.40 vs. $2.58 analyst consensus estimate and revenues of $4.525B-$4.675B vs. $4.8B consensus.

Colfax as an industrial company certainly is not immune against headwinds of the world economy but the company will continue to grow by acquisitions and growth investments.

I wouldn’t be surprised to hear them announcing an acquisition pretty soon.

Hopefully this will be in a sector which is not heavy industry and more independent of the economic cycles than there existing activities.

Stay tuned for more to come. CFX certainly is a buy at this price!

We wish a Happy and Peaceful Christmas and a very successful New Year 2015 to all our readers!

Only 3 weeks left and 2014 is over!

December 9th, 2014 Comments off

This blog follows the stock of 2 companies:

Colfax Corporation (NYSE: CFX), the industrial manufacturing and fluid handling company and

Markel Corporation (NYSE: MKL), the speciality and niche insurer.

So how did they perform year to date?

Let’s start with the worst: Colfax performance is a whopping -24% ytd    … ouch …

Now the better one: Markel’s performance is +20% ytd beating the S&P 500 which performed 13.6% ytd.

Does this change our long term view of these 2 companies:    …    NO!

The investment thesis of Colfax is still intact: It grows by successful acquisitions and integration of the acquired activities getting them up to their efficiency levels.

On the conference call Q3 2014 CEO Steve Simms hinted at a full acquisition pipeline, so expect more. Insiders do the same and are buying shares!

Markel on the contrary got finally the performance it deserves I would say.

This reflects the successful integration of Alterra and slightly improving general conditions of the insurance market.

Both shares are a buy at these prices. Don’t forget, we are in for the long term!

Wird die Restrukturierung von Staatsschulden in Europa bald ein Thema?

November 27th, 2014 Comments off

Alle erwarten, dass die EZB demnächst ihr Kaufprogramm für Staatsanleihen ausweiten wird. Quantitative Lockerung also in immer stärkerem Ausmass im schwächelnden Europa.

In ganz Europa erreichen deshalb die Anleiherenditen neue Tiefstände. Die Rendite spanischer Anleihen mit zehn Jahren Laufzeit fiel erstmals unter die Marke von 2%. Italienische und portugiesische Anleihen mit derselben Laufzeit sanken in gleichem Ausmass.

Aber lässt sich allein mit monetären Massnahmen bei gleichzeitigem Ausbleiben von politischen und rechtlichen Strukturreformen Wirtschaftswachstum erzeugen, das die Staatsverschuldung wieder auf ein erträgliches Niveau sinken lässt?

Die historische Erfahrung spricht dagegen!

Die Staatsschulden haben wohl auch bereits ein solches Ausmass erreicht, das sie selbst bei stärkerem Wirtschaftswachstum nicht mehr innerhalb eines vernünftigen Zeitraumes zurückzuführen wären.

Deshalb überrascht es nicht, dass das Thema Beendigung der Schuldenkrise durch Restrukturierung und Erlass von Schulden zunehmend diskutiert wird, wie u.a. Jim Reid von der Deutschen Bank besorgt feststellt (siehe über seine Studie vom September 2014). Dies würde bedeuten, dass die ultimative Finanzblase unserer Jahre wohl die Staatschulden am Bondmarkt wären.

Und nochmals ein Blick in die Geschichte:

Als während der Lateinamerika-Krise der 1980er Jahre die Banken wieder ausreichend rekapitalisiert waren, wurde erkannt, dass die Staatsschulden der Region restrukturiert werden müssen. Den Anfang machte Mexiko, das den Schuldendienst im August 1982 einstellte.

Die vergleichbare Ausgangslage wäre in Europa jetzt gegeben: Nach Abschluss des Stresstests der EZB ist sichergestellt, dass das Bankensystem wieder ausreichend kapitalisiert ist!

Markel just released its 13F Holding Report

November 12th, 2014 Comments off

Markel Corp. (NYSE: MKL) just released its 13F Holding Report which they filed with the SEC.

As always this is a very interesting filing!

It reveals in which shares of public companies CIO Thomas Gayner is invested in in order to achieve his above average investment results!

Of course this does not include “Markel Ventures” which invests exclusively in privately held companies.

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Markel needs to improve Markel Ventures!

November 8th, 2014 Comments off

Markel Corp. (NYSE: MKL) released its Q3 2014 results and the 10Q.
As usual the transcript of the conference call has been published by Seeking Alpha.

So what’s the picture?
Book value per share, perhaps the single most important metric in the insurance business is up 8% year to date at $514.06

All three insurance segments — U.S., international, and reinsurance — made an underwriting profit with an overall combined ratio of 97% and they continued to align the legacy Alterra reserves with the Markel’s reserving philosophies.

Equity investments returned 7.3% and fixed income 4.5%, for an average return of 5.2% over the 9 months period which is pretty good.
During the quarter, Markel added $300 million to its equity portfolio, which now stands at 52% of shareholder equity, up from 48% at the end of 2013.
Markel will gradually increase the equity percentage of their holdings over the next months which means better investment returns over the long term but at the same time also more volatility.

But what a contrast to the results of Markel Ventures:
This non-insurance division had revenues of $595 million in the nine month period, up from $486 million in the corresponding period last year but net earnings were a meager 2.7%
Management emphasizes that the more important metrix to watch is EBITDA but as we all know this backs out depreciation which is a real cost!

Markel Ventures purchased Cottrell Industries, the leading manufacturer of car holding trailers and equipment during the quarter.

As CIO Thomas Gayner pointed out we’ll see more from Cottrell as well as the rest of the Markel Ventures companies in the fourth quarter.

We certainly have to watch closely within three months!

Markel Ventures is designed after Berkshire Hathaway but in order to match this success story or even get up to the profitability of the investments within the Markel insurance divisions they need to improve dramatically!

At book value/share of $514.06 and at yesterday’s closing price of $701.89 Markel is valued at a price/book ratio of 1.4
As a price/book of 1.5 times is surely justified for this high quality company, the share price will eventually rise to $771 over the next months.

Although not a discount at today’s price Markel certainly remains a buy as a long term investment!

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Markel released its Q3 2014 Earnings!

November 6th, 2014 Comments off

Markel Corp. (NYSE: MKL) released its Q3 2014 earnings.

Book value/common share came in at $514.06 up 8% from $477.16 at December 31, 2013

Have a look!

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