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We came across a bullish thesis on Markel Group Inc. (MKL) on Substack by Value Don't Lie. In this article, we will summarize the bulls’ thesis on MKL. Markel Group Inc. (MKL)'s share was trading at $1813.28 as of April 28th. MKL’s trailing and forward P/E were 9.10 and 12.71 respectively according to Yahoo Finance.
A team of accountants in a boardroom, discussing strategic moves of an insurance company.
Markel Corporation, often dubbed a “mini-Berkshire,” is a diversified insurance holding company with three main segments: specialty insurance, public and private investments, and a collection of non-insurance operating businesses called Markel Ventures. Its core insurance business focuses on long-tail excess and surplus lines, consistently generating underwriting profits in 8 of the last 9 years, though it has lagged peers in recent profitability improvements—especially in reinsurance. Markel Ventures, a $5.1 billion revenue operation with a 12.5% EBITDA margin, spans industries from construction services to consumer products and now contributes 40–50% of consolidated earnings. Despite the segment’s strong performance, limited financial disclosures raise concerns among investors. On the investment side, Markel’s public equity portfolio, managed by CEO Tom Gayner, grew to $11.8 billion by 2024 and includes high-quality names like Berkshire Hathaway. However, it has underperformed broader market indices by 100–150 basis points over 5–10 years. With $13.1 billion in net cash and investments—or $1,025 per share—this sum makes up over half of Markel’s market cap, although not all of it is excess capital due to regulatory requirements.
The stock’s underperformance has caught the attention of activist investors, including JANA Partners, who have urged a separation of the insurance and Ventures businesses to unlock value. Markel’s management has acknowledged areas needing improvement, particularly insurance, stating that improved results here are essential for the company’s long-term potential. Capital allocation has shifted significantly in recent years. After spending $4.2 billion on acquisitions between 2015–2021, Markel deployed $8.8 billion into its investment portfolio since 2021. Share buybacks have also increased meaningfully, reaching $573 million in 2024—though still modest relative to its $23 billion market cap.
Valuation remains a core topic. Markel uses a two-part intrinsic value estimate based on operating earnings and net asset value, applying a conservative 12x multiple to normalized earnings. As of year-end 2024, this approach yielded an intrinsic value of $2,610 per share, up 18% CAGR over five years, versus just a 9% CAGR in stock price. Alternatively, with $1.94 billion in earnings and $13.1 billion in net investments, the stock trades at an implied 5.1x multiple, suggesting meaningful undervaluation. With operational tailwinds in Ventures, strategic pressure to unlock asset value, and visible capital deployment into buybacks, Markel presents a compelling investment opportunity with multiple levers for upside if execution improves—especially in insurance.