Tom Gayner’s Top 5 3rd-Quarter Trades


Tom Gayner
(Trades, Portfolio), co-CEO of Markel Corp., has revealed his portfolio for the third quarter of 2021, which ended on Sept. 30. His top trades include additions to his Analog Devices Inc. (ADI, Financial) and Regeneron Pharmaceuticals Inc. (REGN, Financial) holdings, the dissolution of his position in Maxim Integrated Products Inc. (MXIM, Financial), a reduction to his International Flavors & Fragrances Inc. (IFF, Financial) holding and a new buy into Dollar General Corp. (DG, Financial).

Gayner utilizes a value-oriented approach to find investments in promising areas where he has the best understanding and knowledge. He maintains a margin of safety on investments and upholds the idea that a business is worth the present value of future cash flows.

Portfolio overview

At the end of the quarter, Gayner’s portfolio contained 125 stocks with three new holdings. It was valued at $7.91 billion and has seen a turnover rate of 1%. Top holdings in the portfolio include Brookfield Asset Management Inc. (

BAM, Financial), Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), Alphabet Inc. (GOOG, Financial) and Amazon.com Inc. (AMZN, Financial).

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The top sectors represented in the portfolio include financial services (40.74%), consumer cyclical (13.46%) and industrials (12.39%).

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Analog Devices

After years of small additions, Gayner’s Analog Devices (

ADI, Financial) position grew by 18.62% with the acquisition of 166,010 shares. The shares came from the acquisition of Maxim Integrated Products (MXIM, Financial), which gave 0.63 shares of Analog Devices for each common share of Maxim. Overall, the transfer of shares had a 0.35% impact on the equity portfolio and GuruFocus estimates the total gain of the holding at 97.63%.

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Analog Devices is a leading analog, mixed signal and digital signal processing chipmaker. The company has a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. The company serves tens of thousands of customers, and more than half of its chip sales are made to industrial and automotive end markets. Analog Devices’ chips are also incorporated into wireless infrastructure equipment.

On Nov. 8, the stock was trading at $184.09 per share with a market cap of $99.06 billion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.

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GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. The company’s strong operating and net margins beat at least 91% of industry competitors and support its healthy profitability rank.

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Top guru shareholders in Analog Devices (

ADI, Financial) include
Al Gore
(Trades, Portfolio), Primecap Management, Pioneer Investments,
First Eagle Investment
(Trades, Portfolio) and
First Pacific Advisors
(Trades, Portfolio).

Maxim Integrated Products

Gayner’s Maxim Integrated Products (

MXIM, Financial) position was dissolved during the quarter upon completion of its acqusition by Analog Devices as noted above. The acquisition was completed on Aug. 26, 2021 upon receiving clearance from China’s State Administration for Market Regulation. GuruFocus estimates the total gain of the position at a lofty 132.15% and the dissolution of the position had a -0.34% impact on the equity portfolio overall.

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“Today is a tremendous milestone for ADI and I’m delighted to welcome the Maxim team, who share our passion for solving our customers’ most complex technology problems,” said Vincent Roche, president and CEO of Analog Devices. “With more than 10,000 engineers and the increased breadth and depth of our best-in-class technologies, we are well-positioned to develop even more complete, cutting-edge solutions for our customers. Together, we will drive the next waves of analog semiconductor innovation, while engineering a healthier, safer and more sustainable future for all.”

International Flavors & Fragrances

After four years of consistent additions, Gayner pulled back his International Flavors & Fragrances (

IFF, Financial) holding with the sale of 74,500 shares. The sale cut the holding by 47.76% as the shares traded at an average price of $146.95 during the quarter. GuruFocus estimates the total gain of the holding at 16.37% and the sale had a -0.14% impact on the equity portfolio overall.

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International Flavors & Fragrances produces ingredients for the food, beverage, health, household goods, personal care and pharmaceutical industries. The company makes proprietary formulations, partnering with customers to deliver custom solutions. The nourish segment, which generates roughly half of revenue, is a leading flavor producer and also sells texturants, plant-based proteins and other ingredients. The health and biosciences business, which generates around one-fourth of revenue, is a global leader in probiotics and enzymes. IFF is also one of the leading fragrance producers in the world. The company also sells pharmaceutical ingredients such as excipients and time-release polymers.

As of Nov. 8, the stock was trading at $146.60 per share with a market cap of $37.31 billion. The stock is trading at a fair value rating according to the GF Value Line.

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GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 4 out of 10. There are currently five severe warning signs issued for the company, including assets growing faster than revenue and an Altman Z-Score placing the company in the distress column. The company’s cash-to-debt ratio of 0.07 ranks it worse than 91.60% of the chemicals industry as debt levels remain at the highest seen in the last decade.

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International Flavors & Fragrances (

IFF, Financial) shares are also owned by Barrow, Hanley, Mewhinney & Strauss, Pioneer Investments,
Seth Klarman
(Trades, Portfolio), the
T Rowe Price Equity Income Fund
(Trades, Portfolio) and
First Pacific Advisors
(Trades, Portfolio).

Dollar General

The guru established a new position during the quarter with the purchase of 37,250 shares of Dollar General (

DG, Financial). The shares were purchased at an average price of $225.50 during the quarter, but the holding has fallen to an estimated loss of 2.14%. Overall, the purchase had a 0.10% impact on the equity portfolio.

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A leading American discount retailer, Dollar General operates over 17,000 stores in 46 states, selling branded and private-label products across a wide variety of categories. In fiscal 2020, more than 76% of net sales came from consumables (including paper and cleaning products, packaged and perishable food, tobacco, and health and beauty items), 12% from seasonal merchandise (such as toys, greeting cards, decorations and gardening supplies), 7% from home products (for example, kitchen supplies, small appliances and cookware) and 5% from basic apparel. Stores average roughly 7,400 square feet, and about 75% of Dollar General locations are in towns of 20,000 or fewer people.

On Nov. 8, the stock was trading at $220.43 per share with a market cap of $51.67 billion. A fair value rating is given to the stock by the GF Value Line.

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GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. The company has been making strides with capital efficiency as the weighted average cost of capital has been easily supported over the last decade.

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Other top guru shareholders in Dollar General (

DG, Financial) include Barrow, Hanley, Mewhinney & Strauss, Pioneer Investments,
Ray Dalio
(Trades, Portfolio),
Frank Sands
(Trades, Portfolio) and
Jim Simons
(Trades, Portfolio)’ Renaissance Technologies.

Regeneron Pharmaceuticals

Rounding out the guru’s top five trades was an addition to his holding in Regeneron Pharmaceuticals (

REGN, Financial). The guru boosted the holding by 11.23% with the purchase of 7,500 shares after another addition in the second quarter. The shares traded at an average price of $621.14 throughout the quarter. Overall, the purchase had a 0.06% impact on the equity portfolio and GuruFocus estimates the total gain of the holding at 23.13%.

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Regeneron Pharmaceuticals discovers, develops and commercializes products that fight eye disease, cardiovascular disease, cancer and inflammation. The company has several marketed products, including Eylea, approved for wet age-related macular degeneration and other eye diseases; Praluent for LDL cholesterol lowering; Dupixent in atopic dermatitis, asthma and nasal polyposis; Libtayo in cutaneous squamous cell carcinoma; and Kevzara in rheumatoid arthritis. Regeneron is also developing monoclonal antibodies with Sanofi in immunology and cancer, and bispecific antibodies and antibody cocktails with other collaborators and independently.

As of Nov. 8, the stock was trading at $622.64 per share with a market cap of $66.97 billion. According to the GF Value Line, the stock is a possible value trap and investors should think twice before buying shares.

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GuruFocus gives the company a financial strength rating of 7 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 10 out of 10. There are currently three severe warning signs issued for assets growing faster than revenue, a declining gross margin and a Beneish M-Score indicating the company may manipulate its financials. The company’s operating cash flow has consistently increased over the last eight years alongside strong free cash flow and net income.

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Gayner is joined by the


Vanguard Health Care Fund
(Trades, Portfolio),
Catherine Wood
(Trades, Portfolio),
Bill Nygren
(Trades, Portfolio),
Steven Cohen
(Trades, Portfolio) and Pioneer Investments as top guru shareholders in Regeneron (REGN, Financial).

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