(V) Markel Corporation: Calculating The Mathematical Value
Modified approach to calculating the simple current value of Markel originally published on Seeking Alpha, plus a special addition.
Few days ago I published a short text on Seeking Alpha on my modified approach for calculating current value of Markel. If you follow my twitter profile (@NicoperJES) this is nothing new. However, if you prefer, you can read the article following the link below (due to seeking alpha publishing policy I cannot share the article here, however, paywall is removed so you can read it). One of the best features of Seeking Alpha is its comment section, so hopefully some interesting people find time to share their opinion on it.
In addition to the analysis in the article itself, I played I bit with the estimation setup and I extrapolated what the future mathematical value could be using some moderate assumptions and looking forward in next five years. These included in broad sense the following:
Underwriting income is to grow on average rate of 2% per year.
Ventures profitability is to grow on average 7% per year, driven by occasional acquisition or two.
ILS will grow at the speed of the economy, or 3.5%.
Investment portfolio, comprising of both bond and equities will grow at 6% CAGR.
Hagerty value will continue to grow at 7% CAGR.
Cash balance grows at 2%.
Debt levels grow at 3.5%.
These numbers were arbitrarily chosen to resemble some past experiences and should not be considered a sound replacement for some real forecasting, nor investment advice (far from it). However, they serve to show the mathematics behind the diesel engine Markel is.
As in the article, estimates of mathematical value are shown on annual figure basis and 3 year average basis.
Disclaimer and kind request
Before you take any actions based on this article, remember, you are trusting an experimental analysis of an anonymous person.
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Best of luck to all of us! 🍀