Tracking Ruane, Cunniff, & Goldfarb's Portfolio - Q1 2020 Update
Summary
- Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased from $8.09B to $6.24B this quarter. The number of positions decreased from 40 to 38.
- They increased Charles Schwab and UnitedHealth, while decreasing Jacobs Engineering and Berkshire Hathaway.
- The top three positions are Alphabet, Berkshire Hathaway, and CarMax, and they add up to ~35% of the portfolio.
This article is part of a series that provides an ongoing analysis of the changes made to Ruane, Cunniff & Goldfarb’s 13F portfolio on a quarterly basis. It is based on their regulatory 13F Form filed on 05/15/2020. Please visit our Tracking Ruane, Cunniff, & Goldfarb’s Portfolio article for an idea on their investment philosophy and our previous update for the moves during Q4 2019.
This quarter Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased ~23%, from $8.09B to $6.24B. The number of holdings decreased from 40 to 38. 18 of those stakes are significantly large (more than ~0.5% of the portfolio each), and they are the focus of this article. The top three positions are at ~35%, while the top five are at ~47% of the 13F assets: Alphabet (GOOG, GOOGL), Berkshire Hathaway (BRK.A, BRK.B), CarMax (KMX), Arista Networks (ANET), and Charles Schwab (SCHW).
The firm is best known as the investment advisor of the Sequoia Fund (MUTF:SEQUX), which has a venerable ~50-year track record (July 15, 1970 inception, 12.94% annualized return compared to 10.50% for the S&P 500 index). After new management took over in Q1 2016, the portfolio has seen a significant shift to information and services businesses from asset-intensive manufacturing and retail. Also, the cash allocation, which had averaged ~20% since inception, is now just ~3%. The following significant stakes in Sequoia’s portfolio are not in the 13F report, as they are not 13F securities: Constellation Software (OTCPK:CNSWF), Rolls-Royce Holdings plc (OTCPK:RYCEY), Vivendi (OTCPK:VIVHY), Hiscox Limited (OTC:HCXLF), a2Milk, Eurofin Scientific (OTCPK:ERFSF), Prosus NV (OTCPK:PROSY), and Melrose Industries plc (OTCPK:MLSPF). Bill Ruane was a Benjamin Graham pupil. To learn about Benjamin Graham's teachings, check out the classics The Intelligent Investor and Security Analysis.
Stake Disposals
None.
New Stakes
None.
Stake Increases
CarMax Inc.: KMX is a top-three ~8% of the portfolio position. It was purchased in Q2 2016 at prices between $46 and $56, and increased by ~70% in Q4 2016 at prices between $48.50 and $66. Q4 2017 saw a ~30% selling at prices between $64 and $77, while next quarter there was an ~80% increase at prices between $59 and $72. The last two years have seen a ~23% selling at prices between ~$45 and ~$100. The stock is now at $95.93.
Note: They have a ~5.8% ownership stake in the business.
Arista Networks: The large (top-five) 6.50% ANET stake was primarily built last quarter at prices between $185 and $249. The stock currently trades at ~$235. There was a ~15% stake increase during the quarter.
Charles Schwab: SCHW is a top-five 6.37% portfolio stake purchased in Q2 2016 at a cost basis of ~$29. This quarter saw a ~40% stake increase at prices between $28.50 and $49. The stock is now at ~$43.
UnitedHealth (UNH): The 5.66% UNH position was established last quarter at prices between $215 and $296, and increased by ~300% this quarter at prices between ~$195 and ~$305. It is now at ~$312.
Credit Acceptance Corp. (CACC): CACC is a fairly large 4.78% stake established in Q1 2017 at prices between $185 and $221. The stock has doubled in the three-year holding period and currently trades at ~$483. There have only been very minor adjustments in the last few quarters.
Note: They have a ~6% ownership stake in Credit Acceptance Corp.
Wayfair Inc. (W): W is a fairly large 4.43% of the 13F portfolio stake purchased in Q3 2019 at prices between $106 and $152. Last quarter saw a ~40% stake increase at prices between $80 and $118. That was followed with another ~30% increase this quarter at prices between ~$24 and ~$110. The stock currently trades at ~$171.
Note: Wayfair has seen a previous round-trip. It was a very small 0.76% of the portfolio position purchased in Q1 2019 at prices between $85 and $172 and disposed last quarter at prices between $138 and $164.
Booking Holdings (BKNG): The 4.32% of the portfolio BKNG stake was purchased in Q1 2017 at prices between $1477 and $1789, and increased by ~40% the following quarter at prices between $1738 and $1911. The stock currently trades at ~$1813. This quarter saw a ~20% stake increase at prices between ~$1152 and ~$2085.
Stake Decreases
Alphabet Inc.: GOOG is the largest 13F stake at ~17% of the portfolio. It was first purchased in 2008, and that original stake was almost sold out the following year. In 2010, a much larger position was built in the mid-$200s price range. In recent activity, Q2 2019 saw a one-third reduction at prices between $1036 and $1288. The stock currently trades at ~$1440. The last two quarters have seen minor trimming.
Berkshire Hathaway: BRK.B is the second-largest position at ~9% of the portfolio. It is a very long-term stake that was already their largest stake in their first 13F filing in 1999. In recent activity, Q1 2018 saw a one-third selling at prices between $191 and $217. The pattern reversed next quarter: a ~10% increase at prices between $185 and $201. The stock is now at ~$201. The last two quarters have seen a roughly one-third reduction at prices between ~$162 and ~$230.
Facebook Inc. (FB): The FB position saw a whopping ~600% stake increase in Q1 2018 at prices between $152 and $193. The next two quarters had seen another ~27% increase at prices between $155 and $218. Q1 2019 saw an about-turn: a ~23% reduction at prices between $124 and $173. The stock currently trades at ~$231 and the stake is at 5.93% of the portfolio. The last few quarters have seen only minor adjustments.
Liberty Broadband (LBRDK): LBRDK is a 5.70% of the portfolio position purchased in Q1 2018 at prices between $86 and $97, and increased by ~20% next quarter at prices between $69 and $85. This quarter saw an ~18% reduction at prices between ~$91 and ~$139. The stock currently trades at ~$135.
Jacobs Engineering Group (J): J is a 5.39% long-term stake first purchased in 2012. In recent activity, Q2 2018 saw a ~20% increase at prices between $56.50 and $67, while the next six quarters saw minor trimming. There was a ~25% selling this quarter at prices between ~$63 and ~$104. The stock currently trades at ~$89.
Mastercard Inc. (MA): MA is a 4.78% of the portfolio stake established soon after its IPO in 2006 at a split-adjusted cost-basis of $4.50 per share. The original position was huge at ~2.4M shares (24M shares after accounting for the 10-for-1 stock-split in 2014). It was sold down by ~72% over the next two years. In recent activity, Q3 2018 saw a ~22% selling at prices between $196 and $224. That was followed with a ~30% selling in Q3 2019 at prices between $257 and $292. The stock currently trades at ~$312. There was a ~10% trimming this quarter.
Liberty Media Formula One (FWONA, FWONK): Sequoia’s Q4 2016 letter disclosed a new stake in Liberty Media Formula One. They participated in Liberty’s acquisition of Formula One and acquired the shares at a discounted price of $25. There was a 24% stake increase in Q2 2017 at prices between $30.50 and $37. The stock is now at ~$36 and the stake is at 4.27% of the portfolio. The six quarters through Q3 2019 had seen an ~18% selling at prices between $28.50 and $43, and that was followed with similar selling last quarter at prices between $40 and $46. This quarter also saw a ~7% trimming.
Amazon.com Inc. (AMZN): AMZN stake was established in Q4 2016 at prices between $719 and $845. Q4 2017 saw the stake almost doubled at prices between $957 and $1196. 2018 saw a ~60% selling at prices between $1170 and $2050. H1 2019 had also seen a one-third selling at prices between $1500 and $1963. The last two quarters have seen another ~45% reduction at prices between ~$1705 and ~$2170. The stock is currently at ~$2483 and the stake is at 3.65% of the portfolio. They are realizing gains.
Visa Inc. (V): Visa is a now a small 1.87% of the portfolio stake. It is a very long-term position first purchased soon after the IPO in 2008. The position was sold down consistently since Q1 2018. That quarter saw a ~30% selling at prices between $114 and $126, and that was followed with a ~22% selling in Q3 2018 at prices between $131 and $151. Q3 2019 saw another ~40% selling at prices between $169 and $186. The stock is now at ~$200. There was a ~13% trimming this quarter.
Kept Steady
Taiwan Semi (TSM): The 2.33% of the portfolio TSM stake was purchased last quarter at prices between $46.50 and $59, and the stock currently trades at $55.20.
The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s 13F stock holdings in Q1 2020:
This article was written by
Analyst’s Disclosure: I am/we are long AMZN, BRK.B, GOOGL, RYCEY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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