Tom Gayner (Trades, Portfolio), chief investment officer of Markel Gayner Asset Management, disclosed last week that his firm’s top five trades during the fourth quarter of 2021 included a new position in FedEx Corp. (FDX, Financial), boosts in Activision Blizzard Inc. (ATVI, Financial), Dollar General Corp. (DG, Financial) and Healthcare Services Corp. (HCSG, Financial) and a reduction to its holding of International Flavors & Fragrances Inc. (IFF, Financial).
The firm, which is owned by Glen Allen, Virginia-based insurance company Markel Corp. (MKL), operates with a margin of safety in the investment portfolio. The firm views company stock as a portion of the business; further, Markel believes that the business is worth the present value of future cash flows. The firm seeks solid returns by concentrating its portfolio in promising areas.
As of December 2021, Markel’s $8.69 billion equity portfolio contains 118 stocks, with three new positions and a turnover ratio of 1%. The top four sectors in terms of weight are financial services, consumer cyclical, industrials and communication services, representing 40.59%, 13.95%, 12.37% and 11.04% of the equity portfolio.
FedEx
Markel purchased 17,500 shares of FedEx (
FDX, Financial), giving the position 0.05% equity portfolio weight. Shares averaged $240.55 during the fourth quarter; the stock is fairly valued based on Monday’s price-to-GF Value ratio of 1.01.
GuruFocus ranks the Memphis, Tennessee-based logistics company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a four-star business predictability rank and a return on equity that outperforms more than 80% of global transportation companies.
Other gurus with holdings in FedEx include Dodge & Cox and
PRIMECAP Management (Trades, Portfolio).
Activision Blizzard
The firm purchased 118,000 shares of Activision Blizzard (
ATVI, Financial), boosting the position by 35.16% and its equity portfolio by 0.09%.
Shares of Activision Blizzard averaged $68.02 during the fourth quarter; the stock is fairly valued based on Monday’s price-to-GF Value ratio of approximately 1.
GuruFocus ranks the Santa Monica, California-based video game company’s financial strength 7 out of 10 on the back of a high Piotroski F-score of 7 and a strong Altman Z-score of 6.91 despite interest coverage and debt ratios underperforming over 60% of global competitors.
Dollar General
Markel invested in 32,500 shares of Dollar General (
DG, Financial), expanding the position by 87.25% and its equity portfolio by 0.09%.
Shares of Dollar General averaged $221.07 during the fourth quarter; the stock is modestly undervalued based on Monday’s price-to-GF Value ratio of 0.88.
GuruFocus ranks the Goodlettsville, Tennessee-based discount retail company’s profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins and returns that outperform more than 88% of global competitors.
Healthcare Services
The firm invested in 285,000 shares of Healthcare Services (
HCSG, Financial), boosting the position by 33.79% and its equity portfolio by 0.06%.
Shares of Healthcare Services averaged $19.30 during the fourth quarter; the stock is significantly undervalued based on Monday’s price-to-GF Value ratio of 0.65.
GuruFocus ranks the Bensalem, Pennsylvania-based health care services company’s financial strength 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 5.8 and interest coverage and debt ratios outperforming more than 80% of global competitors.
International Flavors & Fragrances
The firm sold 58,500 shares of International Flavors & Fragrances (
IFF, Financial), slicing 71.78% of the position and 0.10% of its equity portfolio.
Shares of International Flavors & Fragrances averaged $145.73 during the fourth quarter; the stock is fairly valued based on Monday’s price-to-GF Value ratio of 0.96.
GuruFocus ranks the New York-based chemical company’s financial strength 4 out of 10 on the back of a low Altman Z-score of 1.56 and interest coverage and debt ratios underperforming more than 70% of global competitors.
