Asmus Puhl Finance Blog

Markel Corporation (NYSE: MKL), a high quality insurance company many people compare to Berkshire Hathaway, released its Q3 and 9 months 2011 earnings these days.

They reported net earnings of $ 5.48 /share, lower than the $ 6.48 they earned same quarter last year.

The combined ratio jumped to 100% from 93% in Q3 2010 due to higher losses related to natural catastrophes and due to 2 programs „now in run-off that were exposed to losses associated with the adverse conditions in the residential mortgage market”

Book value per outstanding common share increased only 2% from $ 326.36 to $ 333.11 this year.

But gross written premium volume was just under $ 1.8 billion, up 16% for the 9 months compared to last year.

The Earnings Call Transcript you can find here on Seeking Alpha.

Their investment results were impacted by the market conditions we all know but they managed to reach an overall investment return of their portfolio of 2.8 % so far this year.

As Markel becomes more and more a diversified holding company and is build for long term return we have to keep an eye not only on their public investment portfolio but also on „Markel Ventures”, where they acquire control interest in non-publically traded companies:

Through the first nine-months, other revenues at Markel, which are largely those of the Markel venture company, were $260 million versus 125 million in the prior year, an increase of more than 100% as Chief Investment Officer Tom Gayner explained on the Earnings Call.

Markel’s stock yesterday closed at $ 389.85

It trades at a book value / share of just 1.2 which historically is a very low valuation for this top quality company.

So why not grab some shares ?

Let’s not make a mistake!

A lot of concerns of the financial markets are very legitimate and it seems that this „prolonged European Halloween” which we can watch these days will not end anytime soon.

But don’t let you scare away from the stock market!

Globalization is for real: Among the companies listed on major stock exchanges there is no more such a thing like a pure US or a pure European company.

That means that companies today are much more diversified and independent of single markets or regions like the Eurozone region than they were years ago.

But institutional investors still buy or sell whole regions or even continents….buy Europe…sell Europe….start again…

The individual investor who does not behave like lemmings has a clear edge here:

Try to profit from low prices in depressed markets and try to identify good companies, if possible the no. 1 or no. 2 in there markets with strong balance sheets and capable management.

But avoid European financial companies like banks and insurances at any cost! They are „toxic waste”.

Who knows exactly how much European public debt and which one they will have to write down?

Rather take Colfax stock (NYSE: CFX) as an example, a clear winner and successful integrater in its field of industrial pumps and fluid handling. This blog follows Colfax now for 2 ½ years and it absolutely crushed the S&P 500!

At this time of writing the stock seems a little expensive after it released its excellent Q3 2011 results but why not wait for dips when „financial Halloween” seems to come back to the markets?