sleepydragon Posted February 13 Posted February 13 1 hour ago, Spekulatius said: I think AJG is the better deal than BRO right now. The valuation is almost the same, with BRO having sli*tly lower multiples, it AJG has much netter organic growth. I actually, I switched some BRO to AJG and put fresh money to AJG. I still own more BRO than AJG Bro just announced a buyback deal with bank of America, which rate Bro as neutral and has no rating of AJG. Maybe boa will upgrade Bro after the buyback:)
Spekulatius Posted February 13 Posted February 13 (edited) RYAN shat the bed, imo: https://finance.yahoo.com/quote/RYAN/earnings/RYAN-Q4-2025-earnings_call-393585.html Sounds like the hard market in property and pot. other lines over. CEO Ryan mentions reduction in premiums of 25%+. insurers will see this too soon with lower premiums, imo. hd also mentions he has never seen the insurance market turn soft that quickly. Edited February 13 by Spekulatius
UK Posted February 13 Posted February 13 (edited) 3 hours ago, Spekulatius said: I think AJG is the better deal than BRO right now. The valuation is almost the same, with BRO having slightly lower multiples, it AJG has much netter organic growth. I actually, I switched some BRO to AJG and put fresh money to AJG. I still own more BRO than AJG I agree these are getting very attractive and also think about getting involved into AJG:) Edited February 13 by UK
UK Posted February 13 Posted February 13 On 2/11/2026 at 8:53 PM, MMM20 said: I am nibbling at BRO and forcing myself to ramp on this space. Another one where the compounder -> AI bros have done all the work for us but puking it now? Ironically with that ticker. If raining gold, don’t grab the thimble? Would it be possible to get this chart with longer period and perhaps with some peers added:)?
kab60 Posted February 13 Posted February 13 (edited) Trying to get quickly up to speed here, so sorry if it has already been answered (I read some but not all of the thread), but how do you guys rate capital allocation? Headline ROE looks pretty meager for a lot of these, even if doing some adjustments (like adding back amort.). They seem to have benefitted from multiple arbitrage, but looking at absolute numbers, it's worse than I would've thought (ROE - not TSR...). I really like the business model - asset-light intermediary in an industry with lots of fragmentation on both sides, opaque pricing/terms and an ever increasing and inflating TAM. I just struggle a bit to find the killer management team. The deal BRO did last summer looked very pricey ('luckily' partly paid with pricey stock... Same could be said about AJG deal). What am I missing, and how would people rate these players from best to worst on capital allocation and organic growth prospects (and what's driving the organic growth for the best over the worst?). Thanks! Edited February 13 by kab60
Spekulatius Posted February 13 Posted February 13 4 hours ago, kab60 said: Trying to get quickly up to speed here, so sorry if it has already been answered (I read some but not all of the thread), but how do you guys rate capital allocation? Headline ROE looks pretty meager for a lot of these, even if doing some adjustments (like adding back amort.). They seem to have benefitted from multiple arbitrage, but looking at absolute numbers, it's worse than I would've thought (ROE - not TSR...). I really like the business model - asset-light intermediary in an industry with lots of fragmentation on both sides, opaque pricing/terms and an ever increasing and inflating TAM. I just struggle a bit to find the killer management team. The deal BRO did last summer looked very pricey ('luckily' partly paid with pricey stock... Same could be said about AJG deal). What am I missing, and how would people rate these players from best to worst on capital allocation and organic growth prospects (and what's driving the organic growth for the best over the worst?). Thanks! Just look at the long term record and you get your answer.
UK Posted February 13 Posted February 13 In my humble opinion, these were and likely are one of the best businesses ever: growth, low capex, no participation in risk events, many reasons for existence (I myself just recently used a broker, and got my insurance for a car for 1150 EUR instead of 1500 EUR, just because of some crazy little detail different treatment by the insurer). The problem though was, they were always trading at like 25x+, from the moment I noticed them:). Now you can get them for 15x. Could they go lower still, perhaps 12x, I have no idea:). I did not followed them through Spitzer era, so maybe dealraker could fill the gap and share his thought about all this?
Spekulatius Posted February 13 Posted February 13 1 minute ago, UK said: In my humble opinion, these were and likely are one of the best businesses ever: growth, low capex, no participation in risk events, many reasons for existence (I myself just recently used a broker, and got my insurance for a car for 1150 EUR instead of 1500 EUR, just because of some crazy little detail different treatment by the insurer). The problem though was, they were always trading at like 25x+, from the moment I noticed them:). Now you can get them for 15x. Could they go lower still, perhaps 12x, I have no idea:). I did not followed them through Spitzer era, so maybe dealraker could fill the gap and share his thought about all this? Spitzer was threatening part of the commissions structure for brokers (contingent commissions) which he claimed was akin to bid rigging. It was just part of how the business was done and insurance brokers adapted with little damage to their business model but some scary headlines (criminal charges) in between. This was in the 2004-2006 timeframe . Then came the GFC which pressured insurers and insurance brokers as well. Over a long enough timeframe, every business meets some challenges and trades like dogshyte. Overall, capital light business like brokers can adopt easier than business with a lot of fixed assets which is something that scares me about the AI fuels Capex boom of the Mag 7 and other players.
dealraker Posted February 13 Posted February 13 3 minutes ago, UK said: In my humble opinion, these were and likely are one of the best businesses ever: growth, low capex, no participation in risk events, many reasons for existence (I myself just recently used a broker, and got my insurance for a car for 1150 EUR instead of 1500 EUR, just because of some crazy little detail different treatment by the insurer). The problem though was, they were always trading at like 25x+, from the moment I noticed them:). Now you can get them for 15x. Could they go lower still, perhaps 12x, I have no idea:). I did not followed them through Spitzer era, so maybe dealraker could fill the gap and share his thought about all this? UK the situation today isn't one I'd not expect to happen, I'm far less certain about things than most others, I think my childhood of chaos did a great job of preparing me for all kinds of rough riding. But anyway while personally I'm just so overweighted with broker stocks that I'll not add shares I do manage two family trusts for great niece and great nephew where I added (and made comment here on COBF) to AJG a couple years ago at $185. I will add more AJG today as I have about 40% of those trusts in stocks such as BUD and HSY - stocks that have gained quite a bit of recent and I'd like to keep them no larger than they are - and the AJG is a relatively small in those accounts. During the Elliott Spitzer contingencies investigations the insurance cycle was soft pricing so you had just whammo hitting the stock prices as analysts literally hated them. But the businesses were churning along at a very reasonable progression of size and profits. Of course acquisitions were a part of this growth. We all knew the incredible premium rise era was not going to last, we just didn't know the AI slam was going to come along to hang up on the situation. Interestingly Wells keeps lowering their expected earnings - they just did for BRO - but not too much lower...but the "target" prices are falling dramatically. LOL, like I said I never used Wells for a source of whether to buy or sell, but given they were really the only firm that put a huge amount of time into understanding the brokers I did enjoy reading their stuff. They've soured on RYAN some as of yesterday, but RYAN is too new for me and I've basically not paid much attention to it as I thought it was so richly priced. I have repeatedly over time been impressed with AJG. I've been impressed both with the business and management's seemingly willingness to communicate to the upmost as to all things affecting the business. But the world isn't a perfect place as we know, the one thing I've wondered about is that for instance Patrick Gallagher holds a relatively small amount of AJG stock compared to what the Brown family owns of BRO. He's been a gradual but steady seller of stock for a long time. He only owns, as best as I can figure, about 3.5 times as much stock as I do...which I do find interesting. Spekulatius and others may do a deeper dive and find more shared than I come up with...I'm just mentally not willing and honestly capable any longer of doing the work to fully investigate. Keep in mind that with the exception of my relatively smally 401K that I'm the polar opposite of a Parsad or Viking type investor, my "overweightings" are 100% from time, NOT from allocation. So I'd not be willing, and never have been willing, to "load up" on one single stock, that's just not my nature. I'm out and about doing things unrelated to my investments and probably the most happy man on earth ---- I have no financial worries or concerns. But I do love finance and investing and it does in a super-duper way keep me young and alive, my wife (younger than me) demands that I keep active mentally and loves my participation on COBF! Down the road we go. To me it is all probabilities and to me today the AJG thing is a high probability investment even if the PE's stay where they are today and never go back to anywhere close to the recent past.
UK Posted February 13 Posted February 13 4 minutes ago, dealraker said: UK the situation today isn't one I'd not expect to happen, I'm far less certain about things than most others, I think my childhood of chaos did a great job of preparing me for all kinds of rough riding. But anyway while personally I'm just so overweighted with broker stocks that I'll not add shares I do manage two family trusts for great niece and great nephew where I added (and made comment here on COBF) to AJG a couple years ago at $185. I will add more AJG today as I have about 40% of those trusts in stocks such as BUD and HSY - stocks that have gained quite a bit of recent and I'd like to keep them no larger than they are - and the AJG is a relatively small in those accounts. During the Elliott Spitzer contingencies investigations the insurance cycle was soft pricing so you had just whammo hitting the stock prices as analysts literally hated them. But the businesses were churning along at a very reasonable progression of size and profits. Of course acquisitions were a part of this growth. We all knew the incredible premium rise era was not going to last, we just didn't know the AI slam was going to come along to hang up on the situation. Interestingly Wells keeps lowering their expected earnings - they just did for BRO - but not too much lower...but the "target" prices are falling dramatically. LOL, like I said I never used Wells for a source of whether to buy or sell, but given they were really the only firm that put a huge amount of time into understanding the brokers I did enjoy reading their stuff. They've soured on RYAN some as of yesterday, but RYAN is too new for me and I've basically not paid much attention to it as I thought it was so richly priced. I have repeatedly over time been impressed with AJG. I've been impressed both with the business and management's seemingly willingness to communicate to the upmost as to all things affecting the business. But the world isn't a perfect place as we know, the one thing I've wondered about is that for instance Patrick Gallagher holds a relatively small amount of AJG stock compared to what the Brown family owns of BRO. He's been a gradual but steady seller of stock for a long time. He only owns, as best as I can figure, about 3.5 times as much stock as I do...which I do find interesting. Spekulatius and others may do a deeper dive and find more shared than I come up with...I'm just mentally not willing and honestly capable any longer of doing the work to fully investigate. Keep in mind that with the exception of my relatively smally 401K that I'm the polar opposite of a Parsad or Viking type investor, my "overweightings" are 100% from time, NOT from allocation. So I'd not be willing, and never have been willing, to "load up" on one single stock, that's just not my nature. I'm out and about doing things unrelated to my investments and probably the most happy man on earth ---- I have no financial worries or concerns. But I do love finance and investing and it does in a super-duper way keep me young and alive, my wife (younger than me) demands that I keep active mentally and loves my participation on COBF! Down the road we go. To me it is all probabilities and to me today the AJG thing is a high probability investment even if the PE's stay where they are today and never go back to anywhere close to the recent past. Thank you!
73 Reds Posted February 13 Posted February 13 11 minutes ago, dealraker said: Interestingly UK I have another observation that has developed over 50 years of stock ownership LOL. Here goes: "When you are obsessively worried about a business/stock that you consider quite strong and with some amount of moat because of a popular external threat? You are probably focused on the wrong spot, the threats might be real and likely it is other stocks/businesses that are really at risk." Yea, over time while zeroing in on a particular "thing" I've found that I've missed the important thing. I was thinking about this concept daily when Parsad, the clear thinker that he is, was hammering Facebook/Meta as a screaming buy. I bought a boat load of that stock back then at $95 - and the stock of course kept going down! There is a lot AI cannot do. But will someone please explain why AI can't - and won't eventually replace most middle-men and brokers in any industry?
kab60 Posted February 13 Posted February 13 (edited) 1 hour ago, Spekulatius said: Just look at the long term record and you get your answer. You think that's representative of the future? That capital allocation, management and organic growth prospects haven't changed? Brown & Brown and AJG both recently did massive deals. That seems to be one reason why the future might not resemble the past. Also, even if it does resemble the past, TIKR tells me BRO and AJG have done like a ~9% CAGR last 20 years (with a ~1% divy on top). That's less than I would've thought given quality of business, despite the recent drawdown. That rhymes with paying a (too?) high price for acquisitions/undisciplined M&A. I'd love to be proven wrong, but I wonder if there's a bit of institutional imperative at work here. They all seem to engage in the same expensive M&A, enjoying a bit of multiple arbitrage, and the timing of BRO and AJG making massive acquisitions is also interesting/worrisome. Edited February 13 by kab60
kab60 Posted February 13 Posted February 13 20 minutes ago, 73 Reds said: There is a lot AI cannot do. But will someone please explain why AI can't - and won't eventually replace most middle-men and brokers in any industry? Opaque pricing, unique risks, attention to detail and a fragmented market place seems to make it a hard nut to crack. What exactly will 'AI' do that digital systems ain't doing today? Not sure on the numbers, but institutions often still use a human broker to trade bonds and FX today. That was always interesting to me given the commodity-like product getting exchanged. I also think Jevons Paradox is one to keep in mind during technological change. If it becomes easier and cheaper to trade risk, total TAM might increase even if parts of the market gets commoditized and taken over by machines.
UK Posted February 13 Posted February 13 (edited) Re AI, also maybe this, will it do it for me:)? Edited February 13 by UK
Hektor Posted February 13 Posted February 13 11 hours ago, Spekulatius said: I think AJG is the better deal than BRO right now. The valuation is almost the same, with BRO having slightly lower multiples, it AJG has much netter organic growth. I actually, I switched some BRO to AJG and put fresh money to AJG. I still own more BRO than AJG Why not MRSH or AON? They all seem to have similar valuation today. MRSH/AON seem to have better ROE.
Eldad Posted February 13 Posted February 13 22 minutes ago, Hektor said: Why not MRSH or AON? They all seem to have similar valuation today. MRSH/AON seem to have better ROE. Only because they are larger and can’t move the needle as much on acquisitions. At the end of the day they all have about 35% Ebitda Margins and pay like 12-16x for acquisitions. AJG and BRO just make more giant acquisitions relative to their size so ROE looks lower. I’m pretty new to the space but it seems to me that wholesale and reinsurance brokerage are likely extremely complicated, niche, and not something in AIs wheelhouse at all. I guess probably MRSH and AON are doing a larger % of that.
rogermunibond Posted February 13 Posted February 13 It's been mentioned briefly in this thread before, but TWFG is looking attractive at $20.
gfp Posted February 13 Posted February 13 Insider purchases ought to start trickling in. Sure sounded like Pat Ryan would be in the market next week. First one I noticed was AON: https://www.sec.gov/Archives/edgar/data/1023262/000119312526048871/xslF345X03/ownership.xml
dwy000 Posted February 13 Posted February 13 Further to @Spekulatius comments from the Ryan call yesterday, the latest Brown & Brown market assessment is out. Certainly not as optimistic and robust as previous versions but still claims there are pockets where pricing will hold up. https://www.bbrown.com/us/insight/market-trends-report-2026-outlook/
dealraker Posted February 13 Posted February 13 (edited) 1 hour ago, kab60 said: You think that's representative of the future? That capital allocation, management and organic growth prospects haven't changed? Brown & Brown and AJG both recently did massive deals. That seems to be one reason why the future might not resemble the past. Also, even if it does resemble the past, TIKR tells me BRO and AJG have done like a ~9% CAGR last 20 years (with a ~1% divy on top). That's less than I would've thought given quality of business, despite the recent drawdown. That rhymes with paying a (too?) high price for acquisitions/undisciplined M&A. I'd love to be proven wrong, but I wonder if there's a bit of institutional imperative at work here. They all seem to engage in the same expensive M&A, enjoying a bit of multiple arbitrage, and the timing of BRO and AJG making massive acquisitions is also interesting/worrisome. BRO and AJG are without a doubt somewhere at the very top of deal makers as to numbers and relative significance for going on 40 years with the very same people/families running the show. Could they mess up? Yep! How likely? Probably not very likely. But without a doubt the last deals were made at market peaks so a big issue is how they were paid for - using their own inflated stock or cash. Edited February 13 by dealraker
pricingpower Posted February 13 Posted February 13 Any books on the insurance broker industry / corporate profiles anyone has liked? The Gallagher Way seems the most broker focused but isn't recent.
Marco Van Basten Posted February 13 Posted February 13 @dealraker, I would NOT own BUD or HSY here, volumes flat to down, little pricing power. I'd bite the bullet, sell, pay the capital gains tax and buy SPGI & MCO. I am wrestling with whether I should sell my CASY that I bought on 01/31/2024.
UK Posted February 13 Posted February 13 1 hour ago, Marco Van Basten said: @dealraker, I would NOT own BUD or HSY here, volumes flat to down, little pricing power. I'd bite the bullet, sell, pay the capital gains tax and buy SPGI & MCO. I am wrestling with whether I should sell my CASY that I bought on 01/31/2024. +1
Junior R Posted February 13 Posted February 13 2 hours ago, UK said: +1 3 hours ago, Marco Van Basten said: @dealraker, I would NOT own BUD or HSY here, volumes flat to down, little pricing power. I'd bite the bullet, sell, pay the capital gains tax and buy SPGI & MCO. I am wrestling with whether I should sell my CASY that I bought on 01/31/2024. HSY went from undervalued to over valued lol
gfp Posted February 13 Posted February 13 6 hours ago, gfp said: Insider purchases ought to start trickling in. Sure sounded like Pat Ryan would be in the market next week. First one I noticed was AON: https://www.sec.gov/Archives/edgar/data/1023262/000119312526048871/xslF345X03/ownership.xml WTW: https://www.sec.gov/Archives/edgar/data/1900425/000114053626000022/xslF345X03/form4.xml
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