Tom Gayner’s Q3 2026 13F Portfolio Review: Markel Group’s Capital Allocation and Intrinsic Value Analysis

Markel Group’s SEC Form 13F filing for the third quarter of 2026 reveals a disciplined execution of long-term value principles, highlighted by a massive 542% share increase in Zoetis Inc. (ZTS) alongside strategic trims in technology leaders Alphabet Inc. (GOOGL) and Meta Platforms, Inc. (META). Managed by Chief Executive Officer Tom Gayner, Markel’s reported US long equity portfolio ended the quarter at $12.84 billion across 145 positions. This quarter's rebalancing demonstrates Gayner's steady, valuation-anchored framework: aggressively deploying capital into high-quality compounders trading at a measurable discount to intrinsic value while systematically re-allocating capital away from positions where market prices have converged with or exceeded base-case intrinsic valuations.

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1. The Investor: Philosophy, Fund, and Lifetime Work#

Tom Gayner oversees the equity investment portfolio for Markel Group, a specialty insurance holding company that has explicitly modeled its capital allocation strategy on Berkshire Hathaway since the 1990s. The portfolio operates as an equity book funded primarily by Markel’s insurance float, maintaining approximately $10 billion in core equity capital within its broader financial asset base.

Markel's investment philosophy is classified by DeepValues Research as "value." The fund focuses on large-cap, high-quality companies with durable economic moats, high returns on invested capital, and superior management teams. The defining characteristic of Gayner’s management is extreme patience: holding core assets over multi-decade time horizons with exceptionally low annual turnover.

Historical core holdings—including Berkshire Hathaway, Brookfield Corporation, Diageo, Visa, and CarMax—demonstrate this float-funded equity compounding approach, establishing Markel as the financial market's cleanest published proxy for a "next Berkshire" style of investing.

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2. The Portfolio at Quarter End: Size, Concentration, and Core Holdings#

As of September 30, 2026, Markel Group’s reported US long equity portfolio was valued at $12.84 billion spread across 145 positions, down slightly from $13.13 billion across 130 positions in Q2 2026. Portfolio structure remains highly concentrated at the top, with the ten largest equity positions representing 43.5% of total reported assets.

Top 15 Portfolio Holdings (As of Q3 2026)#

*Share Class Note: Markel holds both share classes of Alphabet. Alphabet Class C non-voting shares (GOOG) represent Markel's #1 conviction holding ($937.0M, 7.3% of portfolio) and remained untouched in Q3 2026. The Q3 reduction discussed in Section 3 and Section 4.3 occurred exclusively in Alphabet Class A voting shares (GOOGL), which ended the quarter valued at $178.9M (1.4% of portfolio).

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3. What Changed: Positions Bought, Added, Trimmed, and Sold Out#

During Q3 2026, Markel initiated 16 new positions, added to 28 existing holdings, trimmed 8 positions, and completely liquidated 1 position. Portfolio turnover for the quarter was approximately 0.6%, reflecting minimal trading activity. Total estimated purchases equaled ~$83.3 million, while total estimated sales reached ~$106.4 million (calculated at quarter-end prices), making Markel a net seller of equity securities by ~$23.1 million.

Key Portfolio Transactions (Ordered by Total Dollar Impact)#

• Airbnb, Inc. (ABNB): Trimmed share count by 70% (~$27.2M sale); ending position value: $11.8M (0.1% of portfolio).
• Zoetis Inc. (ZTS): Added 542% to share position (~$25.1M buy); ending position value: $29.7M (0.2% of portfolio).
• Meta Platforms, Inc. (META): Trimmed share count by 11% (~$18.1M sale); ending position value: $151.7M (1.2% of portfolio).
• Alphabet Inc. Class A (GOOGL): Trimmed share count by 9% (~$17.9M sale); ending position value: $178.9M (1.4% of portfolio).
• YUM! Brands, Inc. (YUM): Trimmed share count by 42% (~$14.1M sale); ending position value: $19.4M (0.1% of portfolio).
• Deere & Co. (DE): Trimmed share count by 2% (~$11.2M sale); ending position value: $578.3M (4.5% of portfolio).
• Comcast Corp. (CMCSA): Trimmed share count by 64% (~$11.2M sale); ending position value: $6.3M (0.1% of portfolio).
• Watsco, Inc. (WSO): Added 4% to share position (~$7.6M buy); ending position value: $188.6M (1.5% of portfolio).
• Costco Wholesale Corp. (COST): Trimmed share count by 14% (~$4.9M sale); ending position value: $30.7M (0.2% of portfolio).
• Franco-Nevada Corp. (FNV): Added 2% to share position (~$3.2M buy); ending position value: $187.4M (1.5% of portfolio).
• Home Depot, Inc. (HD): Added 1% to share position (~$2.7M buy); ending position value: $265.1M (2.1% of portfolio).
• Linde plc (LIN): Added 2% to share position (~$2.4M buy); ending position value: $104.7M (0.8% of portfolio).
• Zebra Technologies Corp. (ZBRA): New position opened ($2.4M value, 0.0% of portfolio).
• Mobility Global Inc. (MBGL): New position opened ($2.0M value, 0.0% of portfolio).
• Rollins, Inc. (ROL): Added 4% to share position (~$1.9M buy); ending position value: $47.6M (0.4% of portfolio).

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4. Valuation Analysis of the Biggest Moves (Owner-Earnings DCF & Reverse DCF)#

Using DeepValues' owner-earnings Discounted Cash Flow (DCF) framework built on ten years of SEC XBRL filings (10-K and 10-Q), we analyze the multi-year cash trajectories and intrinsic value profiles underlying Gayner’s primary transactions.

Owner Earnings (Maintenance Capex) = Operating Cash Flow - Maintenance Capex - Stock Compensation
Strict Owner Earnings (All Capex) = Operating Cash Flow - Total Capex - Stock Compensation

(Note: Maintenance Capex is defined as the lesser of total Capex and Depreciation & Amortization. Stock compensation is subtracted once as an explicit cash dilution cost).

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4.1 Zoetis Inc. (ZTS) — Aggressive Expansion Below Intrinsic Value#

• Transaction: Added 542% to share count (~$25.1M capital deployed); ending portfolio value: $29.7M (0.2% of portfolio).

10-Year Owner Earnings History ($ in Billions)

Buffett-Style DCF Valuation Metrics

• Inputs: Starting Owner Earnings: $2.3B | Discount Rate: 10.0% | Net Cash: -$7.4B (Cash $1.7B - Debt $9.0B) | Shares Outstanding: 0.413B
• Market Price: $82.99
• Base Intrinsic Value: $97.27 per share (Margin of Safety: 14.7%)
• Conservative Case: $68.11 per share (Growth: 5.2%; Price is 21.9% above conservative value)
• Optimistic Case: $124.97 per share (Growth: 14.3%; Margin of Safety: 33.6%)

Reverse DCF & Asymmetric Safety

At $82.99 per share, the market implies a 5-year owner-earnings growth rate of 7.9% (fading to 2.5%), well below Zoetis's 10-year historical owner-earnings growth rate of 10.3%. Because the market priced ZTS below its historical trajectory, Gayner secured an asymmetric margin of safety, driving his 542% position expansion.

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4.2 Meta Platforms, Inc. (META) — Trimming Near Base Intrinsic Value#

• Transaction: Trimmed share count by 11% (~$18.1M capital realized); ending portfolio value: $151.7M (1.2% of portfolio).

10-Year Owner Earnings History ($ in Billions)

The Growth Capex Paradox: Maintenance vs. Strict Owner Earnings

Meta’s financials display a stark divergence between Maintenance Owner Earnings ($81.2B TTM) and Strict Owner Earnings after all capex ($1.7B TTM). Driven by infrastructure investments in generative AI, Meta's TTM total capex reached $104.4 billion against $24.9 billion in depreciation, leaving $79.5 billion in growth capex.

Under classic owner-earnings theory, spending above depreciation is growth capital meant to expand future earning power. However, if this massive outlay earns returns below Meta's 10.0% cost of capital, the stricter view ($1.7B OE) reflects the truer underlying cash stream.

Buffett-Style DCF Valuation Metrics

• Inputs: Starting Owner Earnings: $81.2B | Discount Rate: 10.0% | Net Cash: -$1.2B (Cash $82.4B - Debt $83.7B) | Shares Outstanding: 2.557B
• Market Price: $621.03
• Base Intrinsic Value: $857.33 per share (Margin of Safety: 27.6%)
• Conservative Case: $291.40 per share (Growth: 7.5%, assigning 50% of growth capex to maintenance; Price is 113.1% above conservative value)
• Optimistic Case: $1,059.97 per share (Growth: 19.0%; Margin of Safety: 41.4%)

Reverse DCF & Rationale

At $621.03, the market implies a 5-year growth rate of 9.0% vs. Meta's 10-year historical baseline of 15.0%.

[Inference]: Gayner’s decision to trim 11% of Meta despite a 27.6% headline margin of safety to base intrinsic value ($857.33) likely reflects deliberate risk management around Meta’s conservative scenario ($291.40). By pruning shares, Gayner hedged against the risk that unprecedented AI growth capex ($79.5B) might dilute return on invested capital if revenue monetization lags capital deployment.

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4.3 Alphabet Inc. (GOOGL) — Pruning a Position Trading Above Intrinsic Value#

• Transaction: Trimmed Class A shares (GOOGL) by 9% (~$17.9M capital realized); ending portfolio value: $178.9M (1.4% of portfolio).

10-Year Owner Earnings History ($ in Billions)

The Growth Capex Paradox: Negative Strict Free Cash Flow

Alphabet’s TTM performance exhibits an extreme capex expansion: Total Capex reached $159.8 billion against $28.5 billion in D&A, creating $131.3 billion in growth capex. While Alphabet generated a robust $120.6 billion in Maintenance Owner Earnings, its Strict Owner Earnings after all capex fell to -$10.7 billion. This transition from capital-light Search monopoly to capital-intensive AI server and data center infrastructure forces value investors to evaluate whether ongoing capital outlays will compound intrinsic value or compress future return on capital.

Buffett-Style DCF Valuation Metrics

• Inputs: Starting Owner Earnings: $120.6B | Discount Rate: 10.0% | Net Cash: +$139.0B (Cash $265.1B - Debt $126.1B) | Shares Outstanding: 12.294B
• Market Price: $280.03
• Base Intrinsic Value: $276.20 per share (Margin of Safety: -1.4%, indicating price is 1.4% above base intrinsic value)
• Conservative Case: $99.58 per share (Growth: 7.5%; Price is 181.2% above conservative value)
• Optimistic Case: $338.77 per share (Growth: 19.0%; Margin of Safety: 17.3%)

Reverse DCF & Investor Rationale

At $280.03, the market implies a 5-year growth rate of 15.3%, matching Alphabet's 10-year historical owner-earnings growth rate of 15.0%. Gayner trimmed GOOGL shares precisely as the market price ($280.03) reached full valuation relative to its base intrinsic value ($276.20), executing classic value discipline by trimming a position that offered zero margin of safety.

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5. Track Record: 10-Year 13F Clone vs. S&P 500 (SPY)#

A 10-year backtest tracking Markel Group's public 13F filings (from November 3, 2016, to November 3, 2026, across 42 quarterly filings) demonstrates consistent long-term compounding with lower downside drawdowns relative to the broad market index.

Benchmark Performance Summary (2016 – 2026)#

• Markel 13F Clone: 15.3% CAGR | Total Return: +314.1% | Max Drawdown: -22.2%
• S&P 500 (SPY): 15.5% CAGR | Total Return: +323.1% | Max Drawdown: -23.9%
• Annualized Performance Differential: -0.2 percentage points per year

Annual Return Comparison Table#

*Partial years (2016: Nov 3 – Dec 31; 2026: Jan 1 – Nov 3).

Cyclical Downside Protection#

The historical performance record highlights Gayner's structural downside protection during bear markets: * In 2018, the 13F Clone declined just -0.9% vs. SPY's -4.6% (3.7 percentage points of alpha). * In 2022, the 13F Clone fell -13.8% vs. SPY's -18.2% (4.4 percentage points of alpha).

Methodology Caveats#

A 13F clone portfolio does not equal Markel Group's actual fund performance. SEC Form 13F excludes non-US equity listings, cash reserves, corporate bonds, short positions, options, and intra-quarter execution. Furthermore, disclosures are delayed by up to 45 days after quarter-end.

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6. What a Patient Investor Can Learn#

1. Ultra-Low Turnover Preserves Capital Compounders: Markel's Q3 portfolio turnover of just 0.6% demonstrates the structural advantage of extreme patience. Minimizing unnecessary portfolio churn eliminates transaction friction and tax inefficiencies, allowing core equity holdings to compound uninterrupted.
2. Valuation-Driven Opportunism in Wide-Moat Assets: Gayner expanded Markel's stake in Zoetis (ZTS) by 542% when market skepticism pushed the equity price ($82.99) below its base intrinsic value ($97.27). The reverse DCF revealed that the market was pricing in just 7.9% growth against a 10-year historical baseline of 10.3%, creating an asymmetric margin of safety.
3. Disciplined Capital Realization at Intrinsic Valuation: Trimming Alphabet Class A shares (GOOGL) as market pricing ($280.03) reached full intrinsic value ($276.20) illustrates systematic risk management. Taking profits at full value frees capital to deploy into higher-conviction, discounted opportunities.
4. Navigating the AI "Growth Capex Paradox": As mega-cap technology firms accelerate infrastructure investments, maintenance owner earnings ($81.2B for META, $120.6B for GOOGL) can sharply diverge from strict cash flows ($1.7B for META, -$10.7B for GOOGL). Intelligent value investors must differentiate essential upkeep from growth investments, monitoring whether heavy infrastructure spending generates returns above the 10.0% cost of capital.

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7. Key Numbers#

• Reported US Long Equity Portfolio Value: $12.84 Billion (across 145 positions)
• Top 10 Position Concentration: 43.5% of total reported equity assets
• Q3 2026 Portfolio Turnover: ~0.6% (Buys: ~$83.3M | Sells: ~$106.4M | Net Seller: ~$23.1M)
• Largest Net Addition: Zoetis Inc. (ZTS) — Added 542% (~$25.1M) at $82.99 vs. Base Intrinsic Value of $97.27 (14.7% Margin of Safety)
• Largest Reductions: Airbnb (ABNB, -70%), Meta Platforms (META, -11%), Alphabet Class A (GOOGL, -9%)
• 10-Year 13F Clone CAGR: 15.3% (vs. SPY 15.5%, with superior downside preservation)

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8. Closing Note: The Limitations of 13F Filings & Disclaimer#

SEC Form 13F filings provide valuable window insight into institutional capital allocation, but suffer from inherent reporting limitations. Form 13F reflects only long US-listed equity positions as of September 30, 2026, and is published up to 45 days after the close of the calendar quarter. It excludes non-US equity securities, cash balances, fixed-income instruments, short positions, derivatives, and any portfolio transactions executed subsequent to quarter-end.

Disclaimer: This document is created exclusively for educational and research purposes by DeepValues Research and does not constitute financial advice, investment recommendations, or an offer to buy or sell any security.