Tom Gayner: “We’re Marathoners, Not Sprinters”

In the realm of long-term investing, few philosophies are as tested as the commitment to rational capital allocation and patience. Tom Gayner, CEO of Markel Group, embodies this approach, stating in his recent interview with Barron’s that his firm’s strategy is to “make good rational capital allocation decisions. Run it to the best of our ability and do it in a long-term fashion.”

This mindset rejects the market’s obsession with short-term results, embracing instead the natural variability of returns. Gayner acknowledges that their 15% compound annual return “is not all been in a straight line,” but firmly believes that “you can’t manufacture artificial smoothness.”

He draws a clear parallel to legendary investor wisdom, noting, “He’d rather have a lumpy 15 than a smooth 10 in terms of percentage returns.”

This perspective frames investing as a marathon, not a series of sprints. Gayner uses the athletic analogy to explain his company’s focus, saying, “we’re marathoners, not sprinters.”

This long-view necessitates a resistance to benchmarking against competitors or the broader market on a short-term basis. He cautions against losing focus by steering by “the lights of each passing ship” instead of the stars, warning that such a tactic is “like driving by looking at the hood ornament of the car rather than the horizon.”

For Gayner, the true measure of success is the compounding of intrinsic value over decades, not quarterly performance.

This principle extends to how he views company valuations, which often appear low when using standard metrics. He argues that for a diversified holding company, the definition of earnings is complex.

“When you’re trying to measure the E of Berkshire or ourselves,” he explains, it is more accurate to consider “economic earnings as opposed to GAAP earnings.” He maintains unwavering faith that “the market is efficient over time,” even if it is “efficientish in shorter time frames.” This conviction allows him to remain focused on business fundamentals rather than stock price fluctuations.

Ultimately, Gayner’s strategy is about building enduring value by concentrating on what is controllable. “We are building one of the great companies,” from his mission statement, a goal that serves as a rallying point.

This is achieved by focusing on doing “things for our customers rather than to our customers.” He believes that if a company operates in a sustainable way where “the world wants us to win,” then good returns will follow as a natural outcome. His final thought on growth is a lesson for every investor: “None of those numbers were ever a specific target. They are just what happened along the way as the result of doing the best we could.”

You can watch the entire interview here: