#53 – The Plodder
Tom Gayner is the CEO of Markel Group and has run its investment portfolio for 35 years, beating the index by an astonishing 1.5% pa. This makes him one of the most successful capital allocators in the US stockmarket, yet he is under the radar. He explains why he holds 140 stocks, although the top 40 represent 80% of the value; why there are so few imitators of the insurance/equity and business investment strategy so successfully deployed by Berkshire and Markel; the simple way to analyse an insurance business; what he has learned from being on the boards of Graham Holdings with Warren Buffett and on the Coca Cola Company; and one secret of Warren Buffett’s success which you likely will not have heard before. Tom Gayner is anything but a plodder, but his thoughtful, modest and cautious approach to investing and life makes him a fantastic role model.
Some takeawaysGetting into InvestingTom grew up on a farm and watched how his father operated as an accountant and a business man and fell in love with business from an early age. After graduation and working as an accountant, he ended up as a stockbroker with a Richmond, Virginia firm, when Markel came to the market in 1985. A unique set of circumstances meant that Steve Markel was the ideal investor for a discounted zero coupon junk bond which Tom had identified as a great opportunity – it was trading at a 70% discount after junk bond leader Drexel went bust. The bond was redeemed at par before the year was out and Tom was given an investment role at Markel, where he has been ever since.
The Markel Shareholder LetterTom takes two weeks to write his annual letter but puts in a lifetime of experience. It’s an outstanding example of the genre, and it comes across as a very personal message, and one directed to his team as well as investors. Tom points out that many of his 22,000 employees are also shareholders. It’s well worth reading a couple of the letters.
Passive vs Active ManagementIn the podcast, Tom discussed the role of active managers. He pointed out that in 1986, there were 7,000 quoted companies in the US and there are now just 3,000. He mused that probably less than 90 and perhaps as few as 9 in 1000 people own Berkshire Hathaway and people have been educated to be terrified of individual stocks. Why is this when the success of Berkshire is demonstrable? He also feels that there are more pricing errors being made in today’s market, because there are not enough active managers – a point repeatedly also made by David Einhorn.
Tom’s Experience on BoardsTom sits on some great boards, including the Coca Cola Company and as Chairman of the Board of the Davis Series Mutual Funds. He also sat on the Graham Holdings board with Warren Buffett and tells a great story on the podcast about how he went to his first meeting and had dinner the night before with his fellow board members. Afterwards, he talked and talked to Warren Buffett but he couldn’t stay up. Tom explains on the podcast why he recruited to the Markel board Lawrence Cunningham, author of The Essays of Warren Buffett: Lessons for Corporate America (now in its 8th edition), and Morgan Housel, author of the multi-million best seller Psychology of Money; both have been valuable contributors.
About Tom GaynerTom Gayner is Chief Executive Officer of Markel Group. He was formerly co-CEO from 2016-2022 and used to oversee the investing activities for the company, as well as the Markel Ventures diverse industrial and service businesses.
Mr. Gayner joined Markel in 1990 to form Markel Gayner Asset Management which provided equity investment counsel for Markel Corporation as well as outside clients.
Prior to joining Markel, Mr. Gayner served as vice president of Davenport & Co of Virginia and as a Certified Public Accountant with PriceWaterhouseCoopers LLP.
Mr. Gayner serves as the Chairman of the Board of the Davis Series Mutual Funds and has served on the boards of the Colfax Corporation, The Coca-Cola Company, Graham Holdings, Cable One and Markel. He is a member of the Investment Advisory Committee of the Virginia Retirement System. He is a graduate of the University of Virginia and The Lawrenceville School.
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Tom recommended The Psychology of Money: Timeless lessons on wealth, greed, and happiness by Morgan Housel whom he invited on the Markel board. He said Morgan was the “oldest 38 year-old” he knew when he met him and he thinks anyone over the age of 10 can “get” this book.
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Buy on amazon Tom also recommended The Cost of These Dreams: Sports Stories and Other Serious Business Paperback by Wright Thompson. Steve was not familiar with this sportswriter who has assembled a collection of true stories about the dream of greatness and its cost in the world of sports.
Buy on amazon Off air, talking to Tom later in the week, he explained that he likes to read fiction because he believes that investors need to exercise both left and right brains – he enjoyed The Master and His Emissary, recommended twice this year (by Tom Slater and Geroge Michelakis). He suggested to Steve, who expressed a desire to read more fiction last year and had not read a single work of fiction in 2025, Trollope’s The Way We Live Now. Steve has ordered it and hopes to finish it before Christmas, but The Master and His Emissary at 462 pages (ex the notes) will probably have to wait.
HOW STEVE KNOWS THE GUESTSteve met Tom at Mario Gabelli’s conference in Omaha and pitched the podcast to him. As Tom was coming to London anyway, Steve decided to wait for his trip and record in person which is always preferable. By coincidence, Steve happened to be in Edinburgh later that week, when Tom presented at the Library of Mistakes and at a Markel mini-reunion. In spite of listening to Tom three times in four days, Steve didn’t hear more than one or two of the same stories twice.
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