Markel’s future results will be influenced by a rising interest environment!

February 15th, 2017 Comments off

Markel Corp. (NYSE: MKL) FY and Q4 results were certainly good, but do not appear sensational.

But at a second glance Markel is the excellent speciality insurer and investment company it always was!

Book value/share only increased 8% to $606.30 compared to $561.23 at December 31, 2015.

The combined ratio increased 3% to 92% in the year over year comparison, but this is still very good in a competitive and difficult insurance market.

Markel Ventures the private equity division of Markel also reported very good results:

Revenue increased by 20% to $1.2 billion and EBITDA increased by an astonishing 81% to $165 million, very good indeed!

Perhaps the most interesting remarks on the conference call came from CIO Tom Gayner regarding the investment results:

“First, we earned 13% on our equity investments during the year, which exceeded the S&P 500 return to 12%, 500 basis points.”

The fixed income portfolio for all of 2016 earned 2.4% in local currency terms.

But wait! This is the number that will improve over time in a rising interest environment:

“While the mark-to-market price of that portfolio dropped a bit in the fourth quarter, with rising interest rates, the reinvestment of new funds took place at higher rates.”

Markel stock trades at 1.5 times book value. This is not cheap but a reasonable price for a long term investment in a high quality company!

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Markel just released FY and Q4 2016 results!

February 9th, 2017 Comments off

Markel Corp. (NYSE: MKL) our speciality insurer just released FY and Q4 2016 results!

Book value/share outstanding was $606.30, up 8% from $561.23 at December 31, 2015!

The combined ratio was 92% in 2016 up 3% compared to 89% in 2015


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Colfax released FY 2016 results!

February 6th, 2017 Comments off

Colfax Corp. (NYSE: CFX) released FY and Q4 2016 results!

Earnings per share for the quarter came in $0.02 ahead of expectations!

Colfax also released a slide presentation of the results and Seeking Alpha published the conference call transcript!

The company continued to restructure and to improve profitibility while still waiting for their markets to fully recover. CEO Matt Trerotola emphasized that Colfax is committed to drive segment operating margins to mid teens over the next 3 to 5 years.

As a first positive sign from the industrial markets gas and fluid handling orders grew 7% organically.

Another goal is to improve the ability to drive growth: “An important part of building that muscle is leveraging the power of the Colfax Business System to improve commercial processes, such as new product development, customer service, segmentation, and channel management”.

And finally after the acquisition of the relatively small Arc Machines business, a leader in high precision, welding and mission for mission-critical applications the M&A pipeline appears to be filled with other candidates to drive future growth.

We think investors are best advised to build up a position and then to wait until Colfax’ industrial markets will fully recover. Then the company should profit in an enormous way because of their slim and very competitive internal structures and this again should propel the stock price!






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Colfax is updating the outlook for 2017

December 20th, 2016 Comments off

Colfax Corp. (NYSE: CFX) is updating the outlook for 2017!

Have a look at the slides of their presentation!

Very interesting is Colfax’ statement that the markets they are operating in have reached the bottom, but they expect a major uptick not before the second half of 2017!

Seems that the market sees it the same way: Colfax stock is up 59% year to date!

Enjoy the ride!

To all our readers we wish a Happy Christmas and a Prosperous New Year 2017!


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Markel reported Q3 2016 results and the market was disappointed!

November 5th, 2016 Comments off

Markel reported Q3 2016 results and the stock finished the day with a loss of 2.4%! Why that?

Book value rose 9% yoy to $ 609.48! Not a bad result, but the consolidated combined ratio worsened to 98% compared to 93% one year ago.

The US insurance segment even lost money with a combined ratio of 101% due to over $50 million of losses and loss adjustment expenses in response to claim trends in Markel’s medical malpractice and specified medical product lines (the transcript of the Q3 conference call has been published by Thomson Reuters). The market didn’t like that.

But investment results showed a much better picture this quarter:
Comprehensive income to shareholders was $89.2 million for the quarter improving from a comprehensive loss to shareholders of $51.1 million one year ago and net investment income grew 7% year over year to $93.1 million.

The non-insurance operations called Markel Ventures also performed very well:
Markel Ventures’ net income to shareholders more than doubled yoy to $13.5 million and Markel Ventures’ EBITDA rose 42% yoy to $41.8 million

Beside the negative insurance claim trends in Markel’s US medical malpractice segment which should be considered a temporary problem Markel performed well in the 3rd quarter of 2016.

At yesterday’s close of $ 825.07 the stock is valued at a price/book ratio of 1.4
Markel certainly remains a long term buy at this price!

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Markel reported a 9% increase of book value!

November 2nd, 2016 Comments off

Markel Corp. (NYSE: MKL), the speciality insurer, released Q3 2016 results.

Book value /common share increased by 9% to $609.48


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Colfax surprised the markets!

October 31st, 2016 Comments off

Colfax Corp. (NYSE: CFX) the fluid handling and fabrication technology group surprised the markets with Q3 2016 earnings.

The company released a profit of 23 cents per share.despite a 9.3% decrease of quarterly revenue to $879.2 million. Earnings, adjusted for one-time gains and costs, were 39 cents per share, 4 cents better than analysts expectations.

Permanent cost reductions, application of „Colfax Business System (CBS)“ and strategic growth initiatives contributed to these results as CEO Matt Trerotola pointed out in the conference call.

“Although our end markets have not improved, the impact of CBS and our strategic growth initiatives are positioning us to outperform. This was demonstrated by several large project winds and asset handling this quarter, and by our Fabrication Technologies Teams’ growth in emerging markets.”

So CFO Chris Hix consequently raised the lower end of the previously-issued adjusted EPS range by $0.05 and now expects $1.50 to $1.55 for full-year 2016 which gave a boost to the stock price!

It really seems that Colfax finally is able to turn things around!

The market environment is still difficult but they already start to grow project orders and continue to apply vigorous cost reductions. This should lead to a huge upside once their relative industrial markets will improve.

At $ 31.85 Colfax stock is valued at a p/e ratio of 21.
At this price the stock market is already anticipating the company’s improvement but it doesn’t seem to late for new investors to open a position in CFX!

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Colfax released Q3 2016 results!

October 28th, 2016 Comments off

Colfax Corp. (NYSE: CFX) released Q3 2016 results!

Not as bad as some had expected. The stock jumped 9% yesterday!


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Very solid results from Markel in Q2 2016!

August 4th, 2016 Comments off

Once again specialty insurer and financial holding company Markel Corp. (NYSE: MKL) released very solid results in Q2 2016!
The transcript of the conference call has been published by SeekingAlpha.

Diluted net income per share was down to $5.41 for the quarter compared to $6.72 for the second quarter of 2015 but the all important ratio in the insurance industry, book value/common share outstanding increased to $603.13 in Q2, up 7% from $561.23 atDecember 31, 2015.

Even better the combined ratio improved to 93% compared to 96% for the second quarter of 2015.
But be aware: Markel actually profits from the absence of large loss events. This will not always be the case in the future. So as a general rule investors should expect a combined ratio below 100%

Co CEO Thomas Gayner was proud to report that this quarter all 3 segments insurance, investments and Markel Ventures contributed to the good results:

“On the investment side of house we earned 5.3% on our equity investments and 4.7% on our fixed income holdings with the total return from the portfolio of 4.9%.
At June 30 equities represented 52% of our shareholders equity compared to 51% at year end.”

At Markel Ventures revenues increased 21% to $584 million compared to $485 million a year ago, primarily due to the acquisition of CapTech in the fourth quarter 2015 and higher sales volume in the manufacturing operations. EBITDA increased 92%, $102 million compared to $53 million.

After the earnings release Markel’s stock went down to $ 921.70 but don’t forget that the stock for some months now is trading at or above 1.5 times book value/share. This is a historically rather expensive stock price for MKL.

But this certainly doesn’t change our long term view!
Markel Corp. remains one of the best long term wealth creators in the stock market today!

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Still a lot of headwinds at Colfax!

July 29th, 2016 Comments off

Colfax Corp. (NYSE: CFX) reported Q2 2016 results yesterday and proved that the economic sectors they are working in are still in very difficult conditions.

Even as they managed to beat analyst expectations they reported lower net sales and lower net earnings than one year ago:
Net sales were $957.2 million, a decrease of 6.7% from the prior year.
Net income was $39.8 million, or $0.32 per dilutive share, compared to $53.1 million, or $0.42 per share, for the second quarter of 2015.

Even more worrisome is that second quarter gas- and fluid-handling orders decreased by 11.3% to $445.7 million compared to orders of $502.3 million for the second quarter of 2015, an organic order decline of 15.5%.

So what did Colfax do in order to address these market problems?

“In response, we have initiated additional, structural cost reduction actions to improve profitability even if the market does not return to growth in near term,” CEO Matthew Trerotola pointed out in the press release.

Shareholders can learn 2 things from this comment:
– Colfax visibility when market conditions will improve is very low.
– Colfax does what it already does for a couple of quarters: lowering costs and restructuring. This will indeed be a   very lean company when finally market conditions will improve.

But until this happens probably a lot more patience is needed.

Colfax stock trades at a p/e ratio of around 19, this is not exactly cheap as the market continues to have faith in this high quality company.

Perhaps news from the acquisition front could brighten the picture but until now nothing has been announced.

Colfax share is a buy for longterm oriented shareholders who can hold out at least until 2017!

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