Markel's 1990 RJR Junk Bonds Bought at 30 Cents Yielded Massive Returns
Tom Gaynor · Tom Gayner: Invest Like The Best · Jan 23, 2024 · at 18:06
Markel CEO Tom Gaynor describes pitching Steve Markel on buying RJR Nabisco PIK zero-coupon junk bonds following the collapse of Drexel Burnham Lambert in 1990.
0:00 / 0:07exact quote · 7.7s
720p mp4 · rendered on demand · StarZero watermark
“And those bonds were trading at 30 cents. He was intrigued by the idea, and I think by December they had been paid off in full.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Tom Gaynor
Gaynor: Leaders should err on the side of staying with people too long
“And I think in general, you should make the error of staying with people too long. Giving them a longer leash and letting them play out their hand as much as is humanly possible.”
Gaynor: Zero percent interest rates will not return for a long time
“But I think that the environment we've just lived through of essentially zero percent rates, that's just weird. There's no fundamental justification for that. And I think we'll look back on it as a, as just a very unusual episode, but we'll be looking back on …”
Gayner Liquidated 20% of Markel's Equity Portfolio in Early 2020
“And as a consequence of that one, 18 that we put up, I did take about 20% of our equity portfolio chips off the table and sold some positions just because again, My number one job is to make sure we are always there to answer the bell for the next round of the…”
Gaynor: Zero Interest Rates Removed Opportunity Cost and Subsidized Bad Ideas
“And the idea of
Of zero percent interest rates or low interest rates.
That meant there was no such thing as a bad idea.
And any possible idea that you had, had no pushback on it from needing to service the debt.
So the capital allocation decisions
That we have…”
Gaynor: Oil wells are not truly inflation-protected due to replacement costs
“In oil wells, You know, you think about that as being an inflation protected kind of asset, but not really, because once all the oil has gone out of that particular well, in order for the company to continue to exist, you're going to need to make capital alloc…”
Macy's Century-Long Retail Advantage Stemmed From Quaker-Inspired Fixed Pricing
“And because he was willing to sell anybody a set of sheets, a set of dishes at the same price, he was able to advertise. And put those prices in the newspaper, and no other merchants would do that at the time. And R.H. Macy, the chain, went for a hundred plus …”