Updated Valuation Notes

Some updated valuations and notes on my three insurance holdings.

Berkshire Hathaway

Semper Augustus did another deep dive into Berkshire this year (among other things), and came up with a valuation band of $207-215 per B-share.

I have it pegged not too far away at $200/share.

Markel

Rational Walk shared his thoughts on Markel’s annual letter. While the share price had done really well in the recent past, it is still probably worth somewhere between $950-$1250/share.

The following table updates the “three separate units” methodology used in this blog post, where the underwriting, investment, and ventures units are analyzed separately. All dollar numbers are in millions.

Screenshot from 2017-04-05 15-09-04

Intrinsic value growing at a reasonable pace. While the growth in stock price has outpaced growth in intrinsic value over the last year, MKL is still probably fairly or slightly undervalued.

Fairfax Financial

Fairfax released its annual letter to a more skeptical audience. Insurance operations are doing great. The hedges are mostly off (the cash hoard is a more conservative hedge). As a consequence, BVPS dropped to $367/share. It currently trades around 1.3 times book (seems reasonable). It is hard to make a quantitative case for buying more, despite the fall in price, unless one shrugs off the recent past, and takes a longer forward looking view. Using updated numbers, I believe a fair “normalized” intrinsic value might be $530-$630/share.

While the hedges are gone, they have a huge cash hoard now, which can be deployed in case the market swoons.

 

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