Tom Gayner: How We Think About Capital Allocation

Johnny HopkinsTom GaynerLeave a Comment

In his recent Q2 2022 Earnings Call, Tom Gayner provided his insights on how he thinks about capital allocation. Here’s an excerpt from the call:

Gayner: The pace and amount of share repurchasing we’re doing is more than we’ve ever done at Markel before.

And I’ll talk — again as you say refresh or the capital allocation triage and philosophy here is the first thing we want to do is invest in organic opportunities in the businesses we’re already in. If we’ve got an insurance opportunity or ventures opportunity where we’re already there and there’s the opportunity to invest capital and grow good returns with proven winners inside the tent. We’re going to do that first.

The second thing we would look to do is acquisitions of additional ventures or insurance companies.

Third thing we would do is to purchase public equity securities.

And the fourth thing that we would do is when we look at all those opportunities and Markel stock meets that test of business producing good returns on capital run by management’s equal measures of talent and integrity with capital discipline at a fair price, and Markel stock comes up meeting all those four things, we’re going to do that too.

And we can do all four of those things at the same time. We do them one, two, three, four, but it might be the circumstance where all four are happening simultaneously. And I would say we’re in one of those environments right now.

So we’re just trying to be rational and make rational decisions and what a rational decision leads me to at the moment is to say, we are buying some Markel stock. So we did.

You can read a transcript of the entire Q2 2022 Earnings Call here:

Markel Q2 2022 Earnings Call

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