Can we agree there’s no drabber colour than brown?
But capitalize the b, add an ampersand and another Brown, and you’ve got Brown & Brown (NYSE:BRO), a slightly colourful, quiet yet highly successful and profitable, family-run company.
B&B was brought to our attention in early February by Chris Mayer, co-founder & Portfolio Manager of Woodlock House Family Capital, and author of 100-Baggers.
Shares of B&B are up a sprightly 32 per cent since then. Mayer gives us an update on the insurance company after it released its quarterly earnings a while ago.
by Chris Mayer
Widespread stock ownership can be another clue to a good culture. At Brown & Brown (BRO), 60% of employees (“teammates” in Brown lingo) are shareholders.
The board and management own ~17% of the stock. And employees own an estimated ~13%.
Anyway, Brown is a company I’ve mentioned before in these pages — in fact, early one when I started writing the blog. I owned Brown & Brown when my fund opened its doors in January 2019, purchasing my first shares at ~$27 per share.
The stock has doubled since. I still own it. And I have added a lot to the position since 2019. I intend to own it for many years.
I like many things about this business including the resiliency and consistency of free cash flow and its ability to reinvest all of its free cash flow into acquiring smaller insurance brokers.
The insurance brokers generally have been good investments — see the 5- and 10-year charts for AON, MMC, etc. I see no reason why they shouldn’t continue to pound out good results.
Brown reported earnings July 26 and they were solid, as usual:
I like it, too, because Brown is another example of a kind of humble business delivering market-beating results over time. Insurance brokers? Not anything sexy about insurance brokers.
But the stock is up nearly 3x over the last five years and over 5x in ten. It’s done that without a lot of drama, too. Good ballast for a portfolio. All you gotta do is leave the stock alone.
Easier said than done, but the key to earning multi-bagger returns.
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