The Digest #127

Gayner on Markel's Value, Life in Weeks, Multi-Disciplinary Thinking, Addictive Personalities, Duolingo, TransDigm, Charles Schwab

Markel Corporation’s 2022 Annual Meeting

Markel Corporation’s 2022 annual meeting took place on May 11. I recently noticed that a full video of the meeting has been posted on the events and presentations section of company’s website. What I found particularly interesting was co-CEO Tom Gayner’s comments regarding how he thinks about Markel’s intrinsic value.

Mr. Gayner’s comments were in the context of reviewing Markel’s history since going public in 1986. He divided this thirty-six year history into twelve years chunks and discussed how he thought about the value of the company at the end of each period.

In April, I wrote an article discussing whether Berkshire Hathaway might be interested in acquiring Markel. Based on Mr. Gayner’s thinking about Markel’s intrinsic value, I suspect that Berkshire would not be willing to pay a price that Markel would accept. Mr. Gayner also commented on Markel potentially being an acquirer as the insurance industry consolidates and made clear his intentions to remain with the company for a long time to come.

Mr. Gayner’s comments on how he thinks about Markel’s value begin at approximately the fifty minute mark of the video shown below.

Disclosure: I own shares of Markel Corporation.

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Articles

A Warren Buffett protégée strikes out on her own by Anupreeta Das, July 17, 2022. Tracy Britt Cool joined Berkshire Hathaway in 2009 and worked directly with Warren Buffett for a decade before leaving to start Kanbrick, a new investment firm. This is an interesting article about her background and the strategy of Kanbrick. Many Berkshire shareholders, myself included, were surprised when Britt Cool decided to leave the company since executives rarely leave Berkshire. (The Indian Express)

Robinhood Was Behind Phantom Surge in Berkshire Hathaway Trade Volume by Alexander Osipovich, July 20, 2022. In early 2021, Berkshire’s Class A trading volume increased and stayed at elevated levels. This puzzled observers including Warren Buffett himself. A study has revealed that fractional trading of Class A shares gave the illusion of higher volume because a fractional trade, no matter how small, is reported as one share. It makes no sense to buy a fractional Class A share instead of full Class B shares. The enhanced voting rights of Class A shares would be a logical reason to buy them, but fractional owners are not able to vote their shares anyway. (WSJ)

Your Life in Weeks by Tim Urban, May 7, 2014. Sometimes it helps to view things in pictures rather than words. This post uses a series of graphics to illustrate the length of a human life and how we typically allocate our time. Most people mindlessly go through life as if it is infinite. Seneca said that “life is long if you know how to use it.” Visualizing the finite nature of life helps when deciding how to use it. (Wait But Why)

Little Ways the World Works by Morgan Housel, July 20, 2022. This article is a great reminder of the importance of multi-disciplinary thinking. “It might sound crazy, but once you understand the basic principles of your profession, you might gain more expertise by reading around your field than within your field. Connecting dots between fields helps you uncover the most powerful forces that guide how the world works, which can be so much more important than a little new detail that’s specific to your profession.” (Collaborative Fund)

What I Miss About Working at Stripe by Brie Wolfson, July 19, 2022. I don’t doubt that some people find working extremely hard for a mission they believe in to be worth the sacrifices. However, this article raised red flags, not only because I was in this type of situation for many years, but also because I can say that it was not worth it in my case. Companies that ask employees to routinely work fifteen hour days and make employees feel guilty about taking a break are usually poorly managed, dysfunctional places to work. “Once, my manager asked me to reconsider the vacation I had been planning because my team needed me. ‘If you go, who will cover your work?’ I looked around at my colleagues who were also regularly working 15-hour days and decided to stay put. I’m proud of that choice. Call me masochistic, but I have to admit that it felt good to care about anything that much. And, to be around people who I know cared that much too.” (Every)

Why You’ll Probably Never Run Out Of Money by Mr. Money Mustache, July 18, 2022. While I agree with many of the points made in this article, I think that building an insurmountable margin of safety prior to retirement is desirable. It is true that the individuals profiled in the article are unlikely to experience poor results, but the one area that doesn’t get enough attention is the risk of serious medical conditions which can quickly upend the most carefully formulated plans. I have grown skeptical of the FIRE movement in recent years and think most people should build a much larger margin of safety before leaving the workforce entirely. (Mr. Money Mustache)

There Will Always Be Sorcerers by Nick Maggiulli, July 19, 2022. There always has been and always will be demand for people who claim to be able to predict the future, regardless of how poor their track record may be. The more complicated the sorcery, the better. “The only difference is how that sorcery will be practiced. Thousands of years ago it was examining a sheep’s liver on an intricate clay map, but today it could be charting price trends using Elliot wave theory. Either way, complexity is what sells the product. Because when things are too simple, people seem to discount them.” (Of Dollars and Data)

The Addictive Personality by Victor Casler, July 16, 2022. This article has interesting insights regarding addictive tendencies and how to manage them. Certain substances and behaviors are benign or even beneficial in small quantities but toxic in larger quantities. Avoiding things that can become harmful in large quantities is certain to avoid those effects, but it might not always be practical. “Once you cross that threshold where indulgence becomes harmful, but not detrimentally so, environment engineering can deter you from sliding too far down the slippery slope of hedonism. Environment engineering creates just a large enough barrier between yourself and your destructive habits that you take the path of least resistance - a more constructive behavior.” (Vic’s Verdict)

The psychology of Apple packaging by Trung Phan, July 21, 2022. “Jobs and Apple’s head designer (Jony Ive) long understood the value of packaging. As Ive recounts: "Steve and I spend a lot of time on the packaging. I love the process of unpacking something. You design a ritual of unpacking to make the product feel special. Packaging can be theater." (SatPost)

What Ben Franklin Can Teach You About Time by Sahil Bloom, July 20, 2022. This is a great article particularly for readers who are not familiar with Ben Franklin. There are a number of actionable insights beyond the familiar “early to bed, early to rise.” Be sure to read to the end for an interesting comparison between Ben Franklin and Hunter S. Thompson’s daily routines. (The Curiosity Chronicle)

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Podcasts

Luis von Ahn, Co-Founder and CEO of Duolingo, July 12, 2022. 2 hours. In 2019, I used Duolingo to brush up on my rudimentary Spanish skills before a trip to walk the Camino de Santiago. In small towns in rural Spain, English is not very common. I was able to speak Spanish well enough to do things like rent a room and order a meal thanks to free Duolingo lessons. This is an interview with the founder of Duolingo which went public last year. After listening to the podcast, I was interested enough in the business to read the latest annual report. (The Tim Ferriss Show)

TransDigm: Redeeming the Most Painful Loss with Rob Small, July 21, 2022. 48 minutes. “Rob Small is a Managing Director at Berkshire Partners and has led Stockbridge, Berkshire’s public equities business, since its inception in 2007. Rob conducted diligence on TransDigm in its 2003 auction before investing personally following the IPO, building an anchor position with Stockbridge in 2007, and joining the Board of Directors in 2010. In this discussion, we cover the core elements composing TransDigm’s business quality, Berkshire’s and Stockbridge’s initial investments, and the trajectory of Rob’s conviction.” (50x)

Charles Schwab: The 8 Trillion Dollar Gorilla, July 20, 2022. 1 hour, 7 minutes. “Schwab is a financial behemoth. They report over 8 trillion in assets under management and a market cap scratching 120 billion. But I think the most fascinating part about this breakdown is the strategic pivot taken by Schwab. While the online brokerage market has been decimated in recent years from fee compression, Schwab has been pivoting their business model to that of a traditional bank. Now, what does that mean? Today, Schwab makes the majority of their money earning interest on customer cash deposits.” (Business Breakdowns)

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Camino de Santiago, Spain — October 2019

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