Asmus Puhl Finance Blog

Markel Corporation (NYSE: MKL) reported their Q1 2014 results and held the usual conference call. The transcript has been published by Seeking Alpha.

Markel is rapidly integrating all Alterra business lines and is now aggregating the underwriting results in 4 segments:

U.S. Insurance, International Insurance, Reinsurance and Other Discontinued Lines.

And increasingly, they are not thinking legacy Alterra or legacy Markel, they are just thinking „our company“, as CFO Anne Waleski put it on the conference call. Therefore it will be more difficult each quarter to separately identify and quantify legacy Alterra results.

Earned premiums increased 68% to $949 million for the first quarter of 2014. The increase in 2014 was driven by the inclusion of the full quarter of legacy Alterra product offerings included in each of the three ongoing underwriting segments, as well as a full quarter from the Hagerty business.

The consolidated combined ratio for the first quarter of 2014 was 95% compared to 91% a year ago. This reflects among other factors the application of a more conservative loss reserving philosophy to legacy Alterra product offerings.

The results of Markel Ventures were a bit disappointing but CIO Thomas Gayner attributed this to seasonality.

Revenues were $171 million compared to $162 million a year ago. Net income to shareholders for the period was just over $1 million in 2014 compared to $3.6 million for the first quarter of 2013.

The all important metric in the insurance industry, book value per share increased 4% since the end of 2013 to $493.96 a share.

Good news came from the investment portfolio: the overall investment return for the first 90 days of the year was a positive 2.0%, with equities up 3%, and fixed income up 1.7%.

Perhaps the most exciting information for the long term return of Markel is that equity investments now comprise 49% of shareholders equity up from the roughly 40% level immediately following the Alterra acquisition and over time they will approach a more normal equity allocation of roughly 80% of shareholders equity and equity investments.

Markel yesterday traded at $640.23 which translates into a price/book ratio of 1.3

As we can expect improving results by applying the more conservative standards of Markel to all legacy Alterra business lines and also improving results from Markel Ventures and the equity investments in general, this stock remains a buy!

Markel Corporation (NYSE: MKL) released its Q1 2014 results!

Book value per common share outstanding increased by 4% from $477.16 at December 31, 2013 to $493.96 at March 31, 2014!

After completing the Victor Technologies Holding acquisition Colfax Corp. (NYSE: CFX) released the Q1 2014 Earnings and hold the Conference Call. Seeking Alpha published the transcript.

Even if adjusted earnings came in 1 ct. short of expectations the results are remarkable!

Sales were up 11% in total reflecting the impact of the acquisitions for gas and fluid handling closed in the fourth quarter of 2013.

Adjusted operating income was $94.1 million representing an adjusted operating margin of 9.8%. Fabrication technologies’ adjusted operating margins were 11.2%. Gas and fluid handling’s adjusted margins were 9.8%

Total orders in the quarter were $583.4 million, up 16.2% year over year, while backlog at the end of the quarter was $1,592.0 million, compared with $1,438.5 million at the end of first-quarter 2013.

Applying its CBS tools Colfax was able to reduce its long-term debt built up to finance the acquisitions to $1.1 billion down from $1.5 billion at the end of 2013.

As a summary CEO Steve Simms pointed out at the conference call, that Colfax „improved operating margins despite a sluggish economic environment and remains confident in achieving both the 2014 targets and the longer term operating profit goals of 13% for ESAB, 17% for fluid handling, and 15% for Howden business including the acquired entities“.

Colfax increased its earnings guidance from $2.40 – $2.65 up to an adjusted earnings per share of $2.45−$2.70 .

This puts the share at a p/e ratio of 27-28.

This is not cheap but Colfax stock never really was cheap up on its way to ten-bagger status for readers of this blog!

The market simply expects Colfax to continue to grow by acquisitions and to improve operational results sometimes dramatically in order to achieve an above average earnings growth rate.

If you are new to CFX and want to build up a position in CFX perhaps the best is to do it „by thirds“ in order to profit from tempory dips in the market!

Colfax (NYSE: CFX) yesterday reported good Q1 2014 results!

Have a look at a seasoned serial acqirer!

This blog started to follow Colfax Corp. (NYSE: CFX) in May 2009 when the stock traded at $7.27 .Today after 5 years it finished the day at $73.70!

Let’s celebrate!

This is a ten-bagger for all our readers who have been invested from the beginning!

Get a nice bottle of champagne!  You and Colfax deserve it!

But don’t forget, the trip is not over yet: Colfax still has a lot of plans for the future!

Stay tuned … after the effect of the champagne has gone, obviously!

After completing the Victor Technologies Holdings Inc. acquisition Colfax Corp. (NYSE: CFX) will release its Q1 2014 earnings on Thursday 24th April 2014 followed by the conference call.

Stay tuned!

There were no news from Colfax Corp. (NYSE: CFX) when the stock finished the day at $70.44 in a rather difficult market after the Fed’s policy announcements.

But readers of this blog are not waiting for precise news, they are waiting for an uptick of the stock price of just $2.26!

Yes, that’s exactly what seperates us from “ten bagger“ status!

You will recall the moment when in May 2009 this blog started to cover Colfax Corporation and its stock stood at $7.27 .

Now we are not far away from $72.70 . At that point we will have made ten times our money, a so called “ten bagger“!

Is there anything we can do for now? No, we just have to do what successful investors often have to do:

… nothing, just sit down and wait patiently as the story unfolds!

Colfax (NYSE: CFX) announced that it has sold all 9’200’000 shares of its public offering at $68.75!

According to the prospectus filed pursuant to rule 424 this amounts to proceeds for Colfax of $610.363 mil before expenses.

As Colfax agreed to acquire Victor Technologies for $947 mil in cash they are now able to finance about 2/3 of the deal by equity.

Well done Colfax!

As the acquisition includes the assumption of debt this guarantees a balanced debt/equity financing of the whole deal!

A transformative year!

That’s the expression Tom Gayner, Chief Investment Officer of Markel Corp. (NYSE: MKL) used in his introduction to the conference call discussing the FY and Q4 2013 results of the company.

But those results are not only “transformative”, they are impressive!

With the acquisition of Alterra Markel roughly doubled the size of the insurance business.

In 2013, gross written premiums increased 56% to $3.9 billion, primarely due to the inclusion of $1 billion of premium from the Alterra segment.

Book Value per share, the most important metric in the insurance business, increased 18% to $477.16 from $403.85 at the end of 2012. Over the last 5 years the compound annual growth in book value per common share outstanding was 17%!

The combined ratio was 97% in both 2013 and 2012. This is more impressive than you might think because the 2013 combined ratio includes Alterra’s 118% combined ratio which itself includes transaction and other acquisition-related costs of $75.1 million, or 9% on the combined ratio and $25.5 million, or 3% of underwriting loss related to catastrophes that occurred during 2013.

Furthermore the combined ratio was unfavorably impacted by applying Markel’s more conservative loss reserving philosophy to Alterra’s loss reserves.

Revenues from Markel Ventures in 2013 were $686 million compared to $489 million in 2012, but the net margin of this segment is still a rather low 3.5%!

Invested assets jumped 89% to $17.6 billion at December 31, 2013 from $9.3 billion at December 31, 2012. Thanks to Alterra this is the new capital available to be invested by Tom Gayner and his team.

The return of their equity portfolio in 2013 was 33.3% similar to the S&P 500 which actually is very good considering the conservative nature of their portfolio.

Markel’s stock yesterday traded at $ 563.06 or 1.2 price/book. Rather cheap for a company which still has integration work to do but given its excellent history of building shareholder value looks a bit “forgotten” by the market.

If the market only would apply a more normalized price/book ratio of 1.5 to Markel the stock would jump to $715, an increase of 27% from today’s level.

This looks like a “strong buy”, doesn’t it?

Interest in the common stock offering of Colfax (NYSE: CFX) must be huge!

Yesterday Colfax announced the upsizing of the common stock offering to 8,000,000 shares together with a green shoe option of additional 1,200,000 shares.

Watch the price! Shares are offered at $ 68.75, that’s not cheap!

Management reassured investors that the transaction will be immediately accretive to adjusted EPS and free cash flow, excluding year one fair value adjustment amortization expense and transaction expenses.

The market believed that and pushed shares of Colfax higher than the price of the public offering. Yesterday Colfax stock ended the day at an all-time high of $ 69.71

Watch the success story of Colfax as it continues to unfold!