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Yahoo
26-05-2025
- Business
- Yahoo
3 Stocks That Could Be Like Buying Berkshire Hathaway In the 1980s
Markel has a business model that is very similar to Berkshire but is far smaller. Billionaire investor Bill Ackman aims to turn Howard Hughes Holdings into a "modern-day" Berkshire. Kinsale Capital Management isn't quite a Berkshire-like business model today, but it could become more like it over time. 10 stocks we like better than Markel Group › Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has produced amazing returns for long-term investors under Warren Buffett's leadership. However, at a more than $1 trillion valuation, its ability to consistently generate outsize returns from here is somewhat limited. To put Berkshire's success into perspective, if you had invested $10,000 in Berkshire Hathaway 40 years ago in 1985, you would have nearly $4.1 million today. And that's if you had bought shares two decades after Warren Buffett took the reins and started building the company into what it is today. Of course, Berkshire's long-term track record will be tough to match. But there are a few companies that have some of the right components in place to grow into a much larger value-creation machine like Berkshire, and here are three in particular that are worth a closer look right now. The most obvious "early Berkshire Hathaway" is specialty insurance company Markel (NYSE: MKL), which is roughly 2% of Berkshire's size by market cap and uses a similar business model. At the core is Markel's insurance business, and its focus on specialty insurance gives it the potential for superior profitability. There's also Markel Ventures, which acquires entire operating businesses, and because of the company's relatively small size, it doesn't need to make billion-dollar acquisitions to potentially move the needle. After all, Buffett has said many times that his biggest obstacle to finding great and meaningful targets is Berkshire's massive size. Then there is Markel's third focus, which is a portfolio of publicly traded stocks, the top holding in which happens to be Berkshire Hathaway. So all three parts of the business are similar in nature to how Berkshire is structured. Markel's recent results have been strong, and there's a solid case to be made that the stock is undervalued. Over the past five years, Markel's intrinsic value has grown by nearly 130% but the stock is up by less than half of that amount. Management is in the process of a strategic review to optimize the business, so now could be a great time to take a look. Howard Hughes Holdings (NYSE: HHH) has been around for about 15 years, and its core business is developing master-planned communities, or MPCs. These are large-scale developments that are the size of small cities, with examples of Howard Hughes' MPC including The Woodlands near Houston and Summerlin in the Las Vegas area. Recently, billionaire hedge fund manager Bill Ackman has been pushing to take the company in a different direction. While he has believed in the MPC business for a long time (he owned 37% of the company previously), Ackman recently invested an additional $900 million in Howard Hughes and became the company's executive chairman for the purpose of acquiring entire businesses with the goal of building a "modern-day Berkshire Hathaway." It's unclear exactly what this will look like, and right now all Howard Hughes has is a $900 million war chest, so it's in the very early stages of conglomerate building. However, what we do know is that the current MPC business and its leadership team will remain as-is, and that Ackman has said that an insurance business will likely play a big role in the future plans. To be fair, I bought Howard Hughes stock for the MPC business, long before Ackman's plans were revealed. But this certainly creates some interesting possibilities, and right now retail investors can buy shares for about 35% less than Ackman just did. One that's a little less obvious of a choice is Kinsale Capital Group (NYSE: KNSL), an insurance company that focuses on specialty insurance for smaller clients. And the main reason is that Kinsale has a tremendously profitable insurance business that should give it plenty of capital and operational flexibility to invest in more unique ways as the business grows. Specialty insurance -- that is, special situations and hard-to-assess risks -- is a tough business. But if you're good at it, there is lots of money to be made. Most insurance companies are happy to generate a single-digit profit margin from underwriting and to make the bulk of their money from investment income. But Kinsale is different. The company has a long track record of best-in-class profitability. In fact, in 2024 Kinsale produced a 76.4% combined ratio, which implies an underwriting profit of nearly 24%. For clarification, Kinsale hasn't expressed interest in building a true conglomerate with non-insurance subsidiaries. However, management had said that as the company scales and its investment portfolio grows, the team is comfortable taking on more exposure to equities. And the incredible underwriting margins from the insurance business give it flexibility to not have to completely focus on immediate income from its investments. I completely acknowledge that Kinsale is the least Berkshire-like business on this list. But I also believe that in 10 years, it will have a significantly more Buffett-style approach to its investment strategy. To be perfectly clear, I don't think there will ever be another Berkshire Hathaway, at least in the sense that one of today's emerging conglomerate will produce 5,500,000% total returns (that's not a typo) over a 60-year period. However, Berkshire Hathaway uses a very replicable method of conglomerate-building, and it can certainly be used to create outsized returns over the years. So while I don't think these three will turn a few thousand dollars into millions of dollars, I think all three are excellent businesses, and I own all three in my own stock portfolio. Before you buy stock in Markel Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Markel Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Matt Frankel has positions in Berkshire Hathaway, Howard Hughes, Kinsale Capital Group, and Markel Group. The Motley Fool has positions in and recommends Berkshire Hathaway, Howard Hughes, Kinsale Capital Group, and Markel Group. The Motley Fool has a disclosure policy. 3 Stocks That Could Be Like Buying Berkshire Hathaway In the 1980s was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Times
18-05-2025
- Business
- Times
Predatory firms are circling Kestrel and Kinsale Capital
Bigger predators are sniffing around the independent wealth management and financial services sector looking for deals. Just weeks after I revealed that Rory Gillen's GillenMarkets was attracting interest, Quilter swooped to buy it. I hear that John Crowe's Kestrel and Gearoid Doyle's Kinsale Capital may also be on the target lists of bigger players. Crowe and his team are highly regarded in the industry, and he runs a tight ship at Kestrel. A core part of Doyle's business is the Compass fund, which is run by the star fund manager Peter Kinney. The fund has absolutely shot out the lights in recent years. I believe both firms also have access to the global bank UBS and its wealth management offering. I hear that a valuation
Yahoo
15-05-2025
- Business
- Yahoo
KNSL Trading at a Premium to Industry: How Should You Play the Stock?
Kinsale Capital Group, Inc. KNSL shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 6.47X is higher than the industry average of 1.52X and the Finance sector's of The Travelers Companies, Inc. TRV and Cincinnati Financial Corporation CINF are also trading at a multiple higher than the industry average, while NMI Holdings Inc. NMIH shares are trading at a discount. Image Source: Zacks Investment Research Kinsale Capital shares have gained 14.3% in the past year, underperforming its industry and the Finance sector's growth of 21.8% and 17.1%, respectively. It, however, outperformed the Zacks S&P 500 composite's return of 10.9%. Image Source: Zacks Investment Research With a market capitalization of $10.23 billion, the average volume of shares traded in the last three months was 0.2 at $438.99 on Wednesday, the stock stands below its 52-week high of $531.79. The stock is trading below the 50-day and 200-day simple moving averages (SMA) of $462.29 and $462.81, respectively, indicating downward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Kinsale Capital's 2025 earnings per share indicates a year-over-year increase of 10%. The consensus estimate for revenues is pegged at $1.75 billion, implying a year-over-year improvement of 10.2%.The consensus estimate for 2026 earnings per share and revenues indicates an increase of 14.8% and 12.5%, respectively, from the corresponding 2025 have grown 44.3% in the past five years, better than the industry average of 18.9%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 6.9%.Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average being 11.07%. Kinsale Capital's return on equity (ROE) of 26.3% for the trailing 12 months compared favorably with the industry's 7.7%, reflecting the company's efficiency in utilizing shareholders' funds. This insurer targets mid-teens ROE over the long return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting KNSL's efficiency in utilizing funds to generate income. KNSL's ROIC of 22.7% for the trailing 12 months compared favorably with the industry's 5.9%. A strong presence across the excess and supply (E&S) market in the United States and high retention rates stemming from contract renewals should drive improved premiums. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains well-positioned to benefit from continued market dislocation, aiding improved submission flows and better pricing has been successfully delivering improved margins and lower loss ratios. The insurer targets clients with small-sized and medium-sized accounts with better pricing and is less prone to competition. Management estimates low double-digit rate increases across the book of Capital enjoys the best combination of high growth and low combined ratio among its peers. It targets a combined ratio in the mid-80s range over the long is well-positioned to generate an improved expense ratio, given its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business. The insurer drives profitability and operational efficiency using a low-interest rate environment, investment income should benefit from the investment of excess operating funds. Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings. Kinsale Capital is poised to gain from its focus on the E&S market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital insurer has an impressive dividend history, increasing dividends since 2017 at a seven-year CAGR (2017-2024) of 12.1%, riding on the strength of operational excellence that supports a solid capital position. As part of wealth distribution, in October 2024, the board of directors authorized a share repurchase program authorizing the repurchase of up to $100 million of common stock. The stock also has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising given its expensive valuation, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report NMI Holdings Inc (NMIH) : Free Stock Analysis Report Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
17-04-2025
- Business
- Globe and Mail
Kinsale Capital: A High Performer in Specialty Insurance
Explore the exciting world of Kinsale Capital (NYSE: KNSL) with our expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market trends and potential investment opportunities! *Stock prices used were the prices of March 12, 2025. The video was published on April 17, 2025. Should you invest $1,000 in Kinsale Capital Group right now? Before you buy stock in Kinsale Capital Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kinsale Capital Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $518,599!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $640,429!* Now, it's worth noting Stock Advisor 's total average return is791% — a market-crushing outperformance compared to152%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of April 14, 2025
