"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q2 2017 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value increased 2% from $10.60B to $10.81B. The number of positions decreased from 88 to 70.They increased Omnicom & Fiat Chrysler while reducing Berkshire Hathaway during the quarter.The top three positions are Berkshire Hathaway, Alphabet, and TJX Companies and they add up to ~26% of the portfolio.This article is part of a series that provides an ongoing analysis of the changes made to Ruane, Cunniff & Goldfarb’s US stock portfolio on a quarterly basis. It is based on their regulatory  filed on 08/14/2017. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q1 2017.This quarter, Ruane, Cunniff, & Goldfarb’s US long portfolio value increased 2% from $10.60B to $10.81B. The number of holdings decreased from 88 to 70. 32 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 25.85% while the top five are at 37.14% of the US long assets: Berkshire Hathaway, Alphabet, TJX Companies, CarMax, and MasterCard.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable 47-year track record. Their cash-allocation is currently at ~9%. The following top-ten stakes in Sequoia’s portfolio are not in the 13F report as they are not 13F securities: Constellation Software (CNSWF) and Rolls-Royce Holdings plc (RYCEY).Bill Ruane was a Benjamin Graham pupil. To learn about Benjamin Graham's teachings, check out the classics  and .New Stakes:Interactive Brokers (IBKR): IBKR is a very small 0.52% of the portfolio stake established this quarter at prices between $33.50 and $38 and the stock currently trades above that range at $41.28.Stake Disposals:Perrigo Company plc (PRGO): PRGO was a minutely small 0.39% of the portfolio position disposed this quarter.Stake Decreases:Berkshire Hathaway (BRK.A) (BRK.B): BRK.B is the largest position at 12.13% of the portfolio. The last significant buying happened in 2012 when there was a one-third increase at prices between $76 and $92. The stock is now at $180. Q4 2016 saw a ~10% trimming at prices between $143 and $167 and that was followed with a ~30% selling last quarter at prices between $159 and $177. This quarter also saw a ~20% reduction at prices between $161 and $172.TJX Companies (TJX): TJX is a large (top three) ~6% of the portfolio position.  It is a very long-term stake and the holding period is over 15 years. The stock has seen a ~15x return over that timeframe. 2015 had seen significant selling: one-third reduction at prices between $64 and $73. The pattern continued last year: ~45% reduction at prices between $67.50 and $83. The stock is now at $71.60. There was a ~5% trimming last quarter and a marginal reduction this quarter. Ruane is continuing to harvest huge long-term gains.MasterCard Inc. (MA): MA is a large (top five) 5.37% 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. Since then, the stake was kept relatively steady as the stock marched higher to the current price of $134 per share. Last three quarters have seen minor reductions.Amazon.com Inc. (AMZN): AMZN is a fairly large 3.60% portfolio stake established in Q4 2016 at prices between $719 and $845. The stock is now at $967. There was a ~9% trimming this quarter at prices between $885 and $1011.O’Reilly Automotive (ORLY): ORLY is a 3.24% of the portfolio stake first purchased in 2004. Around ~1.9M shares (~3.8M shares after accounting for the 2-for-1 stock split in 2005) were acquired at the time at around $20 per share. Q1 2016 saw a ~18% reduction at prices between $232 and $277 and that was followed with another one-third reduction in the following quarter at prices between $253 and $278. It is now at $198. Last three quarters had seen minor trimming while this quarter saw a ~9% reduction at prices between $216 and $270. They are harvesting huge long-term gains. The stock has had a tremendous run (~10 times return) over the holding period.Mohawk Industries (MHK): MHK is a very long-term 2.94% of the portfolio position first purchased in 2001. The position became a significantly large stake in Q3 2002 when close to 10M shares were purchased at a cost-basis of around $50. The position size was reduced by around two-thirds in the 2012-13 timeframe at progressively higher prices. Since then, the sizing had remained relatively steady. Q4 2016 saw a ~25% selling at prices between $177 and $205 and that was followed with another ~28% reduction last quarter at prices between $201 and $232. The stock is currently at $250. Ruane is harvesting long-term gains. There was marginal trimming this quarter.Wells Fargo (WFC): WFC was a minutely small position as of Q1 2016. Over 5M shares were purchased the following quarter at a cost-basis of ~$51 and the stake is now at 2.52% of the portfolio. The stock currently trades at $52.22. Last three quarters have seen a combined ~10% trimming.Baidu Inc. (BIDU): BIDU is a 2.49% of the US long portfolio position established in Q2 2016 at prices between $160 and $196. The stock currently trades at $226. There was a 43% selling this quarter at prices between $172 and $192.Chipotle Mexican Grill (CMG): Most of the ~2% portfolio position in CMG was purchased in Q2 2016 at a cost-basis of ~$433 and the stock is now at $306. Last four quarters have seen minor selling.Primerica Inc. (PRI): PRI is a 1.41% of the portfolio stake first purchased in Q2 2010. It was kept relatively steady till Q1 2015. The following quarter saw a ~20% reduction at prices between $44 and $51. There was a ~31% increase in Q2 2016 at prices between $43 and $59. Q4 2016 saw a ~25% selling at prices between $53 and $72.50 and that was followed with a ~17% selling last quarter at prices between $70 and $83.50. There was another ~20% reduction this quarter at prices between $71.50 and $86. The stock is now at $76.30.Note: Their ownership stake in PRI is at ~4.5%.58.com Inc. (WUBA): WUBA was a minutely small 0.4% position in Q2 2015. The following quarter saw a ~130% increase at prices between $41 and $65. The stake had seen minor trimming since. Q3 2016 saw a two-thirds increase at prices between $44 and $55. There was an about turn this quarter: ~50% sold at prices between $35 and $46. The stock is now at $65.18.Capital One Financial (COF): COF is a very small 1.22% position purchased in Q4 2016 at prices between $71 and $91. Last quarter saw a one-third increase at prices between $82 and $96. The stock currently trades at $81.44. There was marginal trimming this quarter.Fastenal Company (FAST): The original FAST position was from 2001 & 2002 at a cost-basis just under $10 per share. The stock saw three 2-for-1 stock-splits during the holding period and the position was fairly large at 5.5% of the portfolio as of EOY 2015. The stake saw consistent selling every quarter last year: ~60% combined reduction at prices between $37.50 and $49. The pattern continued last quarter: another ~50% selling at prices between $46 and $52. The position was almost sold out this quarter at prices between $42 and $52. The stock is currently at $41.40. They harvested huge long term gains.Goldman Sachs (GS) and IAC Interactive (IACI): These two small (less than ~1.5% of the portfolio each) stakes saw reductions during the quarter.Stake Increases:Alphabet Inc. (GOOG) (GOOGL): GOOG is a large (top three) 7.58% of the portfolio position. 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. Q1 2016 saw a ~18% reduction at prices between $678 and $765 and that was followed with another ~10% selling the following quarter at prices between $668 and $767. The stock is now at $925. This quarter saw a ~15% increase at prices between $823 and $984.CarMax Inc. (KMX): KMX is a top five stake at 5.92% of the portfolio. 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. The stock is now at $63.85. There was a ~5% increase this quarter.Note: Their Q4 2016 investor letter revealed KMX cost-basis as $51.10.Dentsply Sirona Inc. (XRAY): XRAY is a top five 5.31% of the US long portfolio position established in Q1 2016 as a result of the acquisition of Sirona Dental (SIRO) by Dentsply. They had a 2.79M share stake in SIRO (~5% of the business) for which they received ~5M shares (1:1.8142 ratio) of Dentsply Sirona. Q3 2016 saw a ~75% increase at prices between $59 and $65 and that was followed with another ~12% increase the following quarter at prices between $55.50 and $61. The stock is now at $53.69. For investors attempting to follow Ruane, XRAY is a very good option to consider for further research. There was a marginal increase this quarter.Note 1: The original position in Sirona Dental was from 2011 and they have large unrealized gains.Note 2: Dentsply Sirona was profiled in Sequoia’s Q3 2016 investor letter: they are very bullish on the Dentsply merger (closed 2/2016) and believe management under Jeff Slovin is the right team.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 compared to the current price of $36.91. There was a 24% stake increase this quarter at prices between $30.50 and $37. The position is now fairly large at 5% of the portfolio.Charles Schwab (SCHW): SCHW is a medium sized 3.26% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. Last three quarters had seen minor trimming while this quarter saw a marginal increase. The stock is now at $39.77.Jacobs Engineering Group (JEC) and Waters Corp. (WAT): These two ~3% portfolio stakes saw minor increases this quarter. WAT and JEC are long-term stakes first purchased in 2011 and 2012 respectively.Credit Acceptance Corp. (CACC), Fiat Chrysler Auto (FCAU), and Priceline Group (PCLN): These three positions were purchased last quarter and increased significantly this quarter. CACC is a ~2.5% stake established at prices between $185 and $221 and increased by ~12% this quarter at prices between $186 and $263. It currently goes for $265. The ~2% FCAU position was purchased at prices between $9.50 and $11.60 and doubled this quarter at prices between $9.70 and $11.65. The stock is now well above those ranges at $13.47. The ~3% of the portfolio PCLN position was purchased at prices between $1477 and $1789 and increased by ~40% this quarter at prices between $1738 and $1911. The stock currently trades at $1818.Omnicom Group (OMC): The 3% OMC position saw a ~80% increase this quarter at prices between $80 and $86. The original position was from 2011 at prices between $36 and $50. The stock is now at $78.13. For investors attempting to follow, OMC is a good option to consider for further research.Visa Inc. (V): The 2.22% Visa stake saw a 53% increase this quarter at prices between $89 and $97. The stock is now at $104. It is a very long-term stake first purchased soon after the IPO in 2008.Danaher Corp. (DHR) and Emcor Group (EME): These two very small (less than ~1.3% of the portfolio each) positions saw minor increases this quarter.Kept Steady:JD.com (JD), and Builders FirstSource (BLDR): These very small (less than ~1% of the portfolio each) stakes were kept steady this quarter.Note: They have a ~5% ownership stake in BLDR.As a percentage of the portfolio, the remaining positions are all below 0.5% of the portfolio each and so have limited portfolio performance impact.Note: Although the position size is minutely small compared to the size of the portfolio, it is significant that they have a ~6% ownership stake in Trupanion Inc. (TRUP).The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s US stock holdings in Q2 2017:5/23/2017 - Incorporate ticker for Constellation Software (CNSWF) from next round.: Performance: Up 5.48% compared to Up 6.07% for the S&P 500 Index. Number of securities down from 39 at start of 2016 to 26 at Q12017. In 2016 and early 2017 we purchased shares of Carmax, Charles Schwab, Chipotle Mexican Grill, Wells Fargo, Amazon and Formula One Group (formerly known as Liberty Media), and we added to our long-held position in Dentsply Sirona. As a group, these outperformed while the exited positions have underperformed. Priceline Commentary: European Acquisitions 12-years ago (now under booking.com brand) was a clear homerun - $300M paid out accounts for the bulk of the current $80B valuation. Expects it to be able to grow at a rate that justifies the multiple paid. The letter also mentions a new position that they are still buying (started buying near the end of Q1) - will talk about it in Q2 letter. Top ten holdings below:Regulatory Filings thru 5/13/2017: 13G/As on 2/14/2017 - MMYT - 2.4M shares - 5.7%, FAST - 9.4M shares - 3.24%, TRUP - 1.8M shares - 6.1%, KMX - 10.1M shares - 5.4%, IDXX - 28K shares - 0.03%, PRI - 3M shares - 6.6%."