Tom Gayner, who manages the float of insurance company Markel Corp. (MKL, Financial), discussed the key to beating the market over the past 20 years in the company’s 2012 shareholder letter: “We’ve simply looked at individual companies, one at a time, and asked ourselves a few questions. By considering four basic types of questions about individual companies and securities we try to develop enough confidence to make a decision.” The four questions are:
1) Is this a profitable business with good returns on capital without using too much debt?
2) Is the management team equally and sufficiently talented and honest?
3) What are the reinvestment dynamics of the business and how do they manage capital?
4) What is the valuation and what do we have to pay to acquire ownership in the business?
Gayner also discussed his portfolio and investing views in a May interview with GuruFocus.
In the second quarter, Gayner purchased 10 new stocks, for a total portfolio of 107. The largest new purchases are Synalloy Corp. (SYNL, Financial), Chevron Corp. (CVX, Financial), Brookfield Property Partners LP (BPY, Financial), ONEOK Inc. (OKE, Financial) and Blackstone Group LP (BX, Financial).
Synalloy Corp. (SYNL)
Markel purchased 485,343 shares of Synalloy Corp. at $14 per share on average, for a 0.27% position. Up 9% since, it trades for $15.44 on Friday – near a five-year high.
Synalloy Corporation is a Delaware corporation incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945. Synalloy Corporation has a market cap of $100 million; its shares were traded at around $15.66 with a P/E ratio of 19.40 and P/S ratio of 0.50. The dividend yield of Synalloy Corporation stocks is 1.60%. Synalloy Corporation had an annual average earnings growth of 9.6% over the past 10 years.
Synalloy’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is overvalued:
Chevron Corp. (CVX)
Markel purchased 43,000 shares of Chevron Corp. at $121 per share on average, a 0.18% position. The price has changed 1% and is $122.05 Friday.
Chevron Corporation was incorporated in Delaware in 1926 as Standard Oil Company of California, and it adopted the name Chevron Corporation in 1984 and ChevronTexaco Corporation in 2001. Chevron Corp has a market cap of $236.6 billion; its shares were traded at around $122.05 with a P/E ratio of 9.20 and P/S ratio of 1.00. The dividend yield of Chevron Corp stocks is 3.00%. Chevron Corp had an annual average earnings growth of 7.8% over the past 10 years. GuruFocus rated Chevron Corp the business predictability rank of 2-star.
Chevron’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is undervalued:
Brookfield Property Partners LP (BPY)
Gayner purchased 175,122 shares of Brookfield Property Partners for $22 per share on average, a 0.13% position. Having dropped 6% since, the current price is $20.33.
Brookfield Property Partners LP has a market cap of $1.65 billion; its shares were traded at around $20.33 with and P/S ratio of 6.60. The dividend yield of Brookfield Property Partners LP stocks is 0.60%.
Brookfield Property’s revenue and earnings history:
ONEOK Inc. (OKE)
Gayner purchased 70,000 shares of OKEOK Inc. for $47 per share on average, a 0.1% position. Having declined 12% since, the price is $52.58 currently.
ONEOK Inc., an Oklahoma corporation, was organized on May 16, 1997. ONEOK Inc. has a market cap of $10.84 billion; its shares were traded at around $52.58 with a P/E ratio of 38.00 and P/S ratio of 0.80. The dividend yield of ONEOKE Inc. stocks is 2.70%. ONEOKE Inc. had an annual average earnings growth of 10.2% over the past 10 years.
OKEOK’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is overvalued:
Blackstone Group LP (BX)
Gayner purchased 116,900 shares of Blackstone Group at $21 per share on average, a 0.088% position. Having declined 8%, the price is $22.98 Friday.
Blackstone Group LP was formed as a Delaware limited partnership on March 12, 2007. Blackstone Group LP has a market cap of $12.76 billion; its shares were traded at around $22.98 with a P/E ratio of 11.00 and P/S ratio of 3.00. The dividend yield of Blackstone Group LP stocks is 4.60%.
Blackstone’s long-term revenue and earnings history:
The Peter Lynch chart indicates that the stock is overvalued:
See more of Tom Gayner’s stock picks in his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Tom Gayner.
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1) Is this a profitable business with good returns on capital without using too much debt?
2) Is the management team equally and sufficiently talented and honest?
3) What are the reinvestment dynamics of the business and how do they manage capital?
4) What is the valuation and what do we have to pay to acquire ownership in the business?
Gayner also discussed his portfolio and investing views in a May interview with GuruFocus.
In the second quarter, Gayner purchased 10 new stocks, for a total portfolio of 107. The largest new purchases are Synalloy Corp. (SYNL, Financial), Chevron Corp. (CVX, Financial), Brookfield Property Partners LP (BPY, Financial), ONEOK Inc. (OKE, Financial) and Blackstone Group LP (BX, Financial).
Synalloy Corp. (SYNL)
Markel purchased 485,343 shares of Synalloy Corp. at $14 per share on average, for a 0.27% position. Up 9% since, it trades for $15.44 on Friday – near a five-year high.
Synalloy Corporation is a Delaware corporation incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945. Synalloy Corporation has a market cap of $100 million; its shares were traded at around $15.66 with a P/E ratio of 19.40 and P/S ratio of 0.50. The dividend yield of Synalloy Corporation stocks is 1.60%. Synalloy Corporation had an annual average earnings growth of 9.6% over the past 10 years.
Synalloy’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is overvalued:
Chevron Corp. (CVX)
Markel purchased 43,000 shares of Chevron Corp. at $121 per share on average, a 0.18% position. The price has changed 1% and is $122.05 Friday.
Chevron Corporation was incorporated in Delaware in 1926 as Standard Oil Company of California, and it adopted the name Chevron Corporation in 1984 and ChevronTexaco Corporation in 2001. Chevron Corp has a market cap of $236.6 billion; its shares were traded at around $122.05 with a P/E ratio of 9.20 and P/S ratio of 1.00. The dividend yield of Chevron Corp stocks is 3.00%. Chevron Corp had an annual average earnings growth of 7.8% over the past 10 years. GuruFocus rated Chevron Corp the business predictability rank of 2-star.
Chevron’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is undervalued:
Brookfield Property Partners LP (BPY)
Gayner purchased 175,122 shares of Brookfield Property Partners for $22 per share on average, a 0.13% position. Having dropped 6% since, the current price is $20.33.
Brookfield Property Partners LP has a market cap of $1.65 billion; its shares were traded at around $20.33 with and P/S ratio of 6.60. The dividend yield of Brookfield Property Partners LP stocks is 0.60%.
Brookfield Property’s revenue and earnings history:
ONEOK Inc. (OKE)
Gayner purchased 70,000 shares of OKEOK Inc. for $47 per share on average, a 0.1% position. Having declined 12% since, the price is $52.58 currently.
ONEOK Inc., an Oklahoma corporation, was organized on May 16, 1997. ONEOK Inc. has a market cap of $10.84 billion; its shares were traded at around $52.58 with a P/E ratio of 38.00 and P/S ratio of 0.80. The dividend yield of ONEOKE Inc. stocks is 2.70%. ONEOKE Inc. had an annual average earnings growth of 10.2% over the past 10 years.
OKEOK’s long-term revenue and earnings history:
The Peter Lynch chart indicates the stock is overvalued:
Blackstone Group LP (BX)
Gayner purchased 116,900 shares of Blackstone Group at $21 per share on average, a 0.088% position. Having declined 8%, the price is $22.98 Friday.
Blackstone Group LP was formed as a Delaware limited partnership on March 12, 2007. Blackstone Group LP has a market cap of $12.76 billion; its shares were traded at around $22.98 with a P/E ratio of 11.00 and P/S ratio of 3.00. The dividend yield of Blackstone Group LP stocks is 4.60%.
Blackstone’s long-term revenue and earnings history:
The Peter Lynch chart indicates that the stock is overvalued:
See more of Tom Gayner’s stock picks in his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Tom Gayner.
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