bankersfate, you wrote:
I found it curious that he sold. I wonder if he ever commented on that in an AM?
He commented in a blog…here is the transcript link:
https://ritholtz.com/2021/11/transcript-thomas-gayner/
(excerpted)
Let’s talk a little bit about some of your favorite companies. You have some holdings. And when I look at some of your top five or top 10, there are almost nothing like each other. There — there’s just a mix of companies, CarMax, Disney, Berkshire, Amazon, Regeneron, and then a whole bunch of investing firms, BlackRock, Federated, Oak Tree, T. Rowe. Am — have I named anything that you’ve jettisoned since or …
GAYNER: Oh, actually, you know, Oak Tree is — is no longer with us. That’s part of Brookfield Asset Management, which is our second largest holding that we have. And we are no longer owners of CarMax.
RITHOLTZ: Oh, you sold CarMax, which had a huge run-up …
GAYNER: Correct.
RITHOLTZ: … given the craziness with supply chain. And I think, at a certain point, that just became fully valued. I’m going to guess …
GAYNER: Well, no, and I would — I would admit an error on my part in this. And, in fact, the — the gentleman who runs CarMax — the CEO — I mean, we’ve owned it for a long time, but it had been absolutely a great holding. When we sold it, I called him and I said, “Bill, that — that was our circumstance, not yours.” CarMax is a great company. It’s very well-run. I have epic respect for what they do. We enjoyed being a shareholder for — for a long, long time.
When we go back to the initial days of the pandemic and the shock losses from event cancellation insurance …
RITHOLTZ: Sure.
GAYNER: … business interruption, which was uncertain, in the first quarter of 2020 — I lose track of years …
RITHOLTZ: Yeah, same.
GAYNER: … and time these days, you know, we reported a combined ratio of 118. So as compared to our historical record of underwriting profitability where that combined ratio number would always be below 100, 118, that is the worst period Markel Corporation has endured in 90 years of existence.
RITHOLTZ: Wasn’t a great quarter.
GAYNER: It was not a great quarter. And the model where we are using the profits from the insurance company to create the flow — to create the (inaudible) …
RITHOLTZ: Now you’re reversing that.
GAYNER: … exactly. So, jet engines don’t fly in reverse.
RITHOLTZ: Right.
GAYNER: That jet engine was flying in reverse during the first quarter of 2020. As such — and I think even independent of that, there — there were kind of a combined set of forces at work where, look, we got — we got to make sure that the insurance business is on firm capital footing. It’s a regulated business.
RITHOLTZ: Sure.
GAYNER: And we always want margin of safety and margin of error, that humility. Look, let’s — let’s not pretend we’re the smartest. So, if we were the dumbest, what do we need to do to protect ourselves from us …
RITHOLTZ: Right.
GAYNER: … to make sure we keep going? So, we would’ve re-underwritten and as usual, we did. We’ve re-underwrote every single security we’ve worked. And, by the way, in that environment, we also re-underwrote our thinking on every insurance policy. We wrote because it was clear that this was a fundamental change that — that had overtaken all of us. So, let’s make sure that we’re adaptable and thinking that we’re able to answer the bell for the next round of the fact.
So, in looking at each and every security that we owned and recognize — and look, I want to take a little money on the — off the table, and I wish to make sure that the capital footings are impeccably sound and — and unquestionable. Looking at each and every one, among the decisions that we decided to sell was — was CarMax. And I thought, you know, at that point in time 50 percent locations were closed, who needs a new car? Who needs a used car? Well, it turns out everybody did.
RITHOLTZ: Right.
GAYNER: But I did not foresee that coming. And just given the time and facts of the — the — the circumstances, there were — there were several things we sold at that point. In retrospect, they all went up and they all went up a lot …
There’s a lot of other good stuff in this link too : )
tairbear