Markel Is Built Like a Smaller Berkshire Hathaway. Its Stock Sits 18% Below Its 52-Week High.
Markel doesn't hide its aspiration to be the next Berkshire Hathaway, but is the current drawdown a buying opportunity?
Overview
Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) has a market cap of $1.1 trillion. Markel's (NYSE: MKL) market cap is "just" $22 billion. This comparison is important because Markel is open about the fact that it is copying Berkshire Hathaway's business model, leading many to describe it as baby Berkshire. With Markel down around 18% from its 52-week high, as of this writing, and Berkshire Hathaway only down around 2%, should investors buy Markel?
Like Berkshire Hathaway, Markel's core business is insurance. Both companies have taken an aggressive view of the float. The float is made up of the premiums that Markel collects and holds until they are needed to pay claims. While most insurance companies focus on buying bonds, Berkshire and Markel use the float to buy entire companies and invest in select publicly traded stocks.
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Originally published at www.fool.com.