4. Arthur J. Gallagher & Co. (NYSE:AJG)
Number of Hedge Fund Holders: 42
Arthur J. Gallagher & Co. (NYSE:AJG) is an American insurance brokerage, risk management, and HR & benefits consulting company. It offers a comprehensive range of services, including customized property and casualty insurance, risk management programs, and consulting services in over 130 countries.
In the Q3 2024 earnings call, the company’s management highlighted a robust pipeline of over 100 potential mergers, representing approximately $1.5 billion in annualized revenue. Currently, around 60 of these opportunities are in advanced stages, which could contribute about $700 million in annualized revenue. With $1.2 billion in available cash by the end of the third quarter and strong expected free cash flow, Arthur J. Gallagher & Co. (NYSE:AJG) is well-positioned to fund its aggressive mergers and acquisitions strategy with an estimated capacity of around $3 billion for 2024.
Arthur J. Gallagher & Co. (NYSE:AJG) has reported impressive financial performance, with revenues increasing by 16% and organic growth at 8% for the first nine months of 2024. In Q3 alone, total revenues grew by 13% for the company’s combined brokerage and risk management segments. Net earnings increased by 12% in Q3.
The company is also actively investing to add niche experts, roll out new sales and support tools, and expand its data and analytics offerings.
Recently, on October 28, 2024, Arthur J. Gallagher & Co. (NYSE:AJG) announced the acquisition of Filos Agency, a retail property/casualty insurance agency based in Long Beach, New York. Additionally, on October 25, it acquired Via Financial Group in Australia and Redington Ltd. in the UK. These strategic acquisitions reflect Arthur J. Gallagher’s (NYSE:AJG) commitment to expanding its service capabilities and market presence.
Over the past 10 years, Arthur J. Gallagher & Co. (NYSE:AJG) has achieved a 9.72% compound annual growth rate (CAGR) in revenue and a 14.16% CAGR in net income.
As of the second quarter of 2024, AJG was held by 42 hedge funds, according to Insider Monkey’s database. Andvari Associates stated the following regarding Arthur J. Gallagher & Co. (NYSE:AJG) in its Q2 2024 investor letter:
“Founded in 1927 by Arthur J. Gallagher & Co. (NYSE:AJG), the eponymous firm is now the third largest retail property and casualty insurance broker in the United States and also the third largest reinsurance brokerage firm in the world. In addition to their brokerage businesses, Gallagher is a significant player in third-party claims administration and HR & benefits consulting.
As hinted in the above table, Gallagher is an acquisitive company. It has been a major consolidator of the highly fragmented market of insurance brokers for decades. In just the past five full years, Gallagher has acquired 195 businesses. And the market still remains fragmented. The company estimates there are tens of thousands of independent firms across the English-speaking countries of the world.
Given Gallagher’s ability to grow organically, grow through acquisition, and the essential services it provides, there have only been three times in the past twenty-five years when revenues declined: down 0.56% in 2005, down 0.31% in 2008, and down 1.63% in 2020. Which is to say, revenues barely budged despite those tumultuous years. This is a resilient company.”
