Beruflich Dokumente
Kultur Dokumente
J a n u a ry 2 0 1 2
with GuruFocus
Year Return S&P500 Excess
(%) (%) Gain (%)
2010 20.8 15.1 5.7
2009 25.7 26.5 -0.8
Recently, Tom Gayner joined GuruFocus 2008 -34 -37 3.0
for an interview and took question from 2007 -0.4 5.61 -6.0
readers. His answers are below: 2006 25.9 15.79 10.1
5-Year 25.7 12.2 13.5
Cumulative
How did you get started with value 2005 -0.3 4.91 -5.2
investing?
2004 15.2 12 3.2
TG: Well, I started out life as an 2003 31 28.7 2.3
accountant, from the University of 2002 -8.8 -22.1 13.3
Virginia. Then a CPA, working at
2001 16.9 -11.9 28.8
PriceWaterhouseCoopers. I found as I got
10-Year 101.6 16.4 85.2
Cumulative
2000 26.4 -9.1 35.5
Photo Courtesey Markel Corp I think accounting is a
1999 -10.3 21 -31.3
phenomenally good way to 1998 13.3 28.6 -15.3
T h o mas S. G ay ner
President and Chief Investment Officer begin to be an investor because 1997 31.4 33.4 -2.0
Markel Corporation 1996 26.9 23 3.9
accounting is the language 15-Year 331.8 170.2 161.6
Tom Gayner, a renowned valued Cumulative
of business
investor, is Thomas S. Gayner,
President and Chief Investment
Officer since May 2010. Chief into accounting that I was more interested Top 10 hold i ng s
Investment Officer since January in dollars than numbers, so investing
Company Shares %
2001. President, Markel-Gayner seemed to be a little more in tune with Weighting
Asset Management Corporation, a business itself and the world of finance. CarMax Inc. 5,199,169 7.59%
Now, I think accounting is a phenomenally
subsidiary, since December 1990. Berkshire 1,576,897 6.86%
good way to begin to be an investor
Mr. Gayner also serves as director Hathaway B
because accounting is the language of
on the boards of Calfax Corp. and Fairfax Fin Ltd 279,459 6.58%
business, and you need to understand
Washington Post company (WPO). the language and what accounting entries
Berkshire 958 6.26%
Hathaway Inc. Cl A
In his role, he oversees the mean in economic sense. But once I had
Diageo PLC ADS 1,248,181 5.80%
investment of the $2 billion float that language down, I found the craft of
investing was just very attractive to me. So Brookfield Asset 3,086,983 5.21%
of the insurance company. He Management
that was sort of my mental switch. There
achieved a 10-year cumulative return WalMart Stores 1,071,904 3.41%
was a local investment firm in town called
of 101.6 percent compared to the
Davenport and Company of Virginia, which Exxon Mobil Corp. 757,476 3.37%
S&Ps return of 16.4 percent. was a small group here in Richmond. They United Parcel 742,466 2.87%
had an interesting practice where they were Service, Inc.
brokers, and they did research on regional Walt Disney 1,540,794 2.84%
GURU investor digest
companies in Virginia and North Carolina. I
had the opportunity to go there and work as If youve already read the first set of financial books, then the next thing
a stock broker, and as a research analyst
covering companies in Virginia and North you should read is a lot of Mark Twain kind of stuff.
Carolina, to be exposed to a lot of different
industries, a lot of different companies,
and I enjoyed it thoroughly. One of the people do the things they do? My favorite You have been in the insurance
companies that I covered starting in 1986 author is Mark Twain, and I tell people that business for many years, can
when they went public was Markel. I got if youve already studied accounting, and if you tell us how to evaluate an
to meet Steve Markel, and from 1986 youve already read the first set of financial insurance company, how to judge if
through 1990, I covered the company. He books, then the next thing you should read this insurance company is a good
was doing acquisitions for Markel, then is a lot of Mark Twain kind of stuff. And you company, or if its a good company,
Markel did the second half of the Shand should read it with the sense that Mark if its a good investment?
acquisition, which more than doubled the Twain was broke and rich, and broke and
TG: Sure. Okay, lets take the first
size of the company and the investment rich, several times in his life, so theres
statement about whether its a good
portfolio. Steve was managing things sort of a subtext of money, and finance,
company, because you can have a good
himself and decided that he would like a and investing, and behavior that underlies
company that is priced so high that it may
wingman to help him out. He mentioned much of Mark Twains work. And if you read
not be a good investment, so that may be
something to me about coming out and study Mark Twain, I think you get a
different things. However, you can have a
here, and I said, Great, because I saw good sense of the qualitative factors that
bad company that can be priced so cheaply
an insurance company that I liked and affect investing as opposed to just the pure
that if you can buy it at the right price and
respected, that made underwriting profits, numbers. And then the last thing after that
get a hold of it which is what Markel has
and was willing to invest underwriting is that I like reading a lot of biographies,
done in several insurance acquisitions,
profits for the long term. I knew that that people of accomplishment, military figures,
then you can turn a bad company into a
was the formula that Buffett, at Berkshire leaders, athletes, and coaches. Reading
very good investment. So in terms of being
practiced. And I got to stay right here in how these people did what they did is worth
a good company, one of the markers to
Richmond, Virginia. That sounded great, studying.
me would be the reserve development
sign me up. That is the short story of how it
triangles that are published every year
happened. So these books basically help you
in the annual report, because with an
to understand much better in life,
insurance company, like any other financial
So you made it all the way up and business, probably.
institution, the financial statements are
to the Chief Investment Officer
TG: Thats correct. a wrestling match between the income
and President. But, we know that
statement and the balance sheet. So
accounting is different from value
How about Warren Buffett? anything that goes in the income statement
investing, right. Over the process,
as net income, was sort of paid out from
were there any persons or books
the balance sheet. If you are a balance
that influenced you?
sheet oriented company, and thats what
TG: Yes, there are two levels of reading youre culture emphasizes, in the short
that I would suggest to people. The first run, youre penalizing the reported income
would be the traditional stuff that most in the income statement. So how can you
people are probably aware of, and that tell? Well, look at the reserve development
starts with Graham and Dodd, Security triangle, where in any given year they show
Analysis, and The Intelligent Investor. I what they estimate for losses. That is the
also always thought John Train was a biggest liability that an insurance company
great financial writer, Im looking in my typically has. Then you look at how that
bookcases here, I like Peter Lynchs book, develops year after year after year. If those
Beating the Street, A Hundred to One on losses come down, then the company was
Picture courtsey of Forbes.com
the Stock Market that was recommended protecting its balance sheet, it was balance
to me by Chuck Akre, so a lot of financial TG: Well, he is the leading example
sheet oriented, and it was inherently
books that a lot of people have already of our day, of someone who thinks
conservative in the way it set reserves.
read. The next tier of books are much comprehensively, and intelligently, and
And thats the number one marker for a
broader and theyre not really financial flexibly. He is a role model for how you
company that really is caring about the
books, but I would call them human nature should make investment decisions, and
right thing, and in my opinion probably a
books. What makes people tick? Why do business decisions.
good insurance company. Second thing
That makes sense. Thats actually Okay. Thats why you own WalMart,
the kind of company that value Exxon Mobil, UPS, Disney?
investors should buy and hold
forever. If you had to choose one TG: Yes. I love all of those companies, I
investment other than Markel, with think that theyre marvelous companies at
a long term holding period now, great prices right now.
CarMax Stock Price ($): which one would you recommend?
Okay. Do you have any opinion on a
TG: Well, I dont have a specific name that very hot stock, Apple?
I want to suggest for that, because if you
only choose one, you would make that TG: I dont. Its something I wish I had, but I
choice differently than if you could choose dont know how to make any money on that
ten or twenty. I need to allow something one.
to go wrong, which is what diversification
allows you to do. Charlie Munger is Youve talked a lot about why you
correct when he said that diversification is, buy a stock, can you discuss your
protection against ignorance. You may sell strategy?
minimize ignorance as much as possible, TG: In general, we hope to be able to buy
but I think it is arrogant to say that you can a stock and never sell it. That would mean
TG: I think that is a business that will completely eliminate it. Maybe someone that we own a successful business that is
continue to grow. They only had eight else can, but I cant. I dont know how to continuing to grow and compound value.
or ten dealerships when we first started do that. So I always want to allow myself As such, the main reason we sell is that
buying it. But those days they thought they some room to be wrong, to be ignorant, to we recognize we made a mistake when
could have 100. I dont see any reason why find out that things didnt play out the way we bought something i.e. it is not as good
you cant have a Carmax in a lot of towns I expected. Therefore having a portfolio a business as we hoped, or we reach the
way beyond what theyre talking about having more than one position makes a conclusion that the business will not grow
right now. I think being the number one lot of sense, and its the way I view things. and compound value going forward.
dealer, and having the number one market What I would say, is that a lot of people
share in used car arena gives you great are just very negative about stocks, and I think that if you limit your buying to things
information on what transaction prices are. owning businesses. I still want to own you will be able to own for a long time,
Then you work on the process to be as businesses with global growth prospects, you will put more thought into whether
quick and as cost efficient in fixing the car as opposed to earning fixed income levels to buy it or not and that leads to better
and getting it sold, and have the confidence of interest rates that theyre paying. So Im long term decisions. We are not traders
from customers when you offer warranties pretty positive about the equity markets in or looking to buy and sell quickly, so our
on the products. Those factors create a general. The global companies we talked sell strategy largely reflects mistakes and
virtuous cycle. The more you do, the more about are the core of my portfolio. disappointments. Unfortunately, weve got
you can do, the better the pricing is, the our share of those and likely will continue to
more the customers like you, the more your Okay. So basically, mostly high have them as well!
brand matters. The company will be around quality large cap companies. Also, sometimes, meaningful amounts of
for a good long time. The management
TG: Right now, because I think thats over or under valuation occur in certain
has done a very good job of creating the
where the value is. It changes over time. areas of the market. For instance the
system and executing it.
15 years ago I owned a lot of micro cap, global, dominant, franchise companies that
small cap companies, and REITS because we own now are good values in my opinion
thats where the values were in my opinion. and weve been buying them for the last
I didnt own of the any of the large cap several years. 12-15 years ago, they were
companies. Today its sort of the reverse. global, dominant, franchise companies but
The vast majority of my portfolio is in we didnt own any of them because the
the large cap global companies. It goes prices were too high. I would suspect that
through a normal cycle. over the course of the next decade, they
Stocks mentioned:
MKL, KMX, UBSH, BRK.A, BRK.B, FFH, IRE, DEO, DIS, WMT, and MSFT
Current Portfolio
GuruFolio Report
Copyright notice: Please feel free to distribute as long as the current format is intact.