Thursday, February 1, 2007 likes MKL & here is why!

One of my favorite companies on the mid-cap value list is Markel (MKL - Cramer's Take - Stockpickr - Rating). Not that many people have heard of Markel, but it's often considered close to being the next Berkshire Hathaway (BRKA - Cramer's Take - Stockpickr).
First off, Markel doesn't split its stock. It's currently trading at $482, and it trades at just 12 times last year's earnings and at about nine times cash flows.
Markel is also an insurance company, like Berkshire. The beauty of an insurance company is this: Everybody gives you their money, and they never want it back; you can keep it. Eventually you have to give it back, when people have accidents or a hurricane hits, etc. But for now, you get to keep it and invest it. All the profits you make? They're yours.
We track Markel's investments at Stockpickr as well, and you can see some overlap between this name and other value investors.
Among the shareholders in Markel is Buffettesque investor Fairholme, run by Bruce Berkowitz. I like some of his quotes from a 2000 interview with Business Week: "We recognize that you only need a few good ideas in a lifetime to be fabulously wealthy. ... We're always trying to wonder what can go wrong. We're very focused on the downside." And when asked what his biggest mistake was, he responded: "I've never had a big mistake. I've had some tiny ones, but, no, we've never had a big mistake."
And in the past five years he's had an average annual return of 15%.

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