Asmus Puhl Finance Blog

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!

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

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!