No. of Recommendations: 2
Insurers were nearly uniformly cheap around 2011 - many trading near or even under book. Part of this was not just the market being generally selling at low multiples at this time, but Insurance also having been in a 'soft' market since about 2004 - so after 7 years in 2011 people have lost patience and treat it as a permanent condition. Ben Graham was particularly keen to identify when firms had temporarily poor conditions, and observed that the market treated the temporary as the permanent - so you can just buy at that time without any catalyst, and then apply extreme patience to wait it out - even if that means 7+ years. Markel was a particularly high quality one, along with Berkeley Corporation, both commanding IV10/price ratios north of 4 and I scooped those two up as my largest holdings.
I'm close to losing patience with Markel but have been holding out hope that Gayner will return the company to higher growth.
Manlobbi, do you see any areas of the market these days that are similar to insurance in 2011?
Thanks,
Andy
