"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q1 2023 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased from $6.40B to $6.12B this quarter. The number of positions decreased from 32 to 31.They decreased Formula One Group and Meta Platforms during the quarter.The top three positions are Intercontinental Exchange, Formula One Group, and Alphabet, and they add up to ~30% 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  filed on 5/15/2023. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q4 2022.This quarter Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased ~4% from $6.40B to $6.12B. The number of holdings decreased from 32 to 31. 16 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 ~30% while the top five are at ~46% of the 13F assets: Intercontinental Exchange, Formula One Group, and Alphabet, UnitedHealth, and Charles Schwab.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable ~53-year track record (July 15, 1970 inception, 12.98% annualized return compared to 10.95% for the S&P 500 index). The performance for 2022 was terrible: Negative 30.52% compared to Negative 18.11% for the S&P 500 index. For Q1 2023, they again underperformed the S&P 500 Index: 5.93% vs 7.50%. After new management took over in Q1 2016, the portfolio has seen a significant shift to information & services businesses from asset-intensive manufacturing & retail. Also, the cash allocation which had averaged ~20% since inception is now close to zero. The following significant stakes in Sequoia’s portfolio are not in the 13F report as they are not 13F securities: Constellation Software (CNSWF), Eurofins Scientific SE (ERFSF), Rolls-Royce Holdings plc (RYCEY), SAP SE (SAP), and Universal Music Group (UMGNF). Bill Ruane was a Benjamin Graham pupil. To learn about Benjamin Graham's teachings, check out the classics  and .Stake Decreases:Intercontinental Exchange (ICE): The large (top three) ~10% ICE stake was purchased in Q3 2020 at prices between ~$92 and ~$107. There was a ~90% stake increase in Q2 2022 at prices between ~$90 and ~$133. The stock currently trades at ~$111. The last three quarters have seen a ~7% trimming.Formula One Group (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 six quarters through Q3 2019 saw a ~18% selling at prices between $28.50 and $43 and that was followed with similar selling next quarter at prices between $40 and $46. There was a ~17% reduction this quarter at prices between ~$53 and ~$68. FWONA is currently at $69.32. The stake is now a large position at ~10% of the portfolio.Note: their ownership stake in Formula One Group is ~4%.Alphabet Inc. (GOOG) (GOOGL): GOOG is now at 9.48% 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 low-teens price-range. Recent activity follows: Q2 2019 saw a one-third reduction at prices between ~$52 and ~$64. That was followed with a ~60% reduction over the six quarters through Q4 2020 at prices between ~$53 and ~$107. The last three quarters saw a  ~27% reduction at prices between ~$83 and ~$144. The stock currently trades at ~$121. There was a minor ~3% trimming this quarter.UnitedHealth (UNH): UNH is a large (top five) 8.52% of the portfolio stake. It was established in Q4 2019 at prices between $215 and $296 and increased by ~300% next quarter at prices between ~$195 and ~$305. Q3 2020 saw a ~30% stake increase at prices between ~$291 and ~$324. There was a ~25% selling in Q2 2022 at prices between ~$452 and ~$546. That was followed with a ~15% reduction last quarter at prices between ~$499 and ~$555. The stock currently trades at ~$477.  There was a ~2% trimming this quarter.Charles Schwab (SCHW): SCHW is now at ~7% of the portfolio. It was first purchased in Q2 2016 at a cost-basis of ~$29. Q1 2020 saw a ~40% stake increase at prices between $28.50 and $49. There was a ~17% selling next quarter at prices between $32.50 and $43. The stock is now at ~$54. The last several quarters saw minor trimming.Taiwan Semi (TSM): The 6.69% of the portfolio TSM stake was purchased in Q4 2019 at prices between $46.50 and $59. There was a ~130% stake increase in Q2 2020 at around the same price range. Q1 2021 saw a ~12% selling while in Q3 2021 there was a ~20% stake increase. Q3 2022 saw a ~30% selling at prices between ~$69 and ~$92. The stock currently trades at ~$102. The last few quarters saw minor trimming.Note: their investment thesis is based on the following: fabs are capital intensive (~$10B per facility) and the leader naturally has a strong moat thereby yielding big profit margins. Debatably, they produce the most important manufactured component in the modern economy. It is essentially a monopoly, and the main concern is geopolitical risks.CarMax Inc. (KMX): KMX is currently at ~6% of the 13F 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. Q4 2017 saw a ~30% selling at prices between $64 and $77 while next quarter there was a ~80% increase at prices between $59 and $72. The eleven quarters through Q4 2020 had seen a ~45% selling at prices between ~$44 and ~$109. The stock is now at $78.30. The last several quarters have also seen minor trimming.Micron Technology (MU) and Elevance Health (ELV): MU is a 4.60% of the portfolio position built over the two quarters through Q3 2021 at prices between ~$74 and ~$96 and the stock currently trades well below that range at $65.80. Q3 2022 saw a one-third reduction at prices between ~$49 and ~$65. That was followed with a ~5% trimming in the last two quarters. The ~6% ELV stake was established in H1 2021 at prices between ~$288 and ~$402 and it is now at ~$445. Q2 2022 saw a ~42% reduction at prices between ~$444 and ~$530. That was followed with a ~16% selling last quarter at prices between ~$454 and ~$547. There was a minor ~2% trimming this quarter.Credit Acceptance Corp. (CACC): CACC is a 5.57% stake established in Q1 2017 at prices between $185 and $221. There was a ~25% stake increase in Q4 2020 at prices between $288 and $356. Q3 2021 saw a ~18% selling at prices between ~$438 and ~$670. That was followed with a one-third reduction next quarter at prices between ~$582 and ~$696. The stock is now at ~$493. The last five quarters also saw minor trimming.Note: They have a ~6% ownership stake in Credit Acceptance Corp.Jacobs Solutions (J) previously Jacobs Engineering: J is a ~5% long-term stake first purchased in 2012. Recent activity follows: 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 in Q1 2020 at prices between ~$63 and ~$104. That was followed with a similar reduction in Q2 2021 at prices between ~$129 and ~$143. The stock currently trades at ~$115. The last seven quarters also saw minor trimming.Meta Platforms (META): The 4.42% META position saw a whopping ~600% stake increase in Q1 2018 at prices between $152 and $193. The next two quarters saw another ~27% increase at prices between $155 and $218. Q1 2019 saw an about turn: ~23% reduction at prices between $124 and $173. Q1 2021 saw a ~13% stake increase at prices between ~$246 and ~$299. Q3 2022 also saw a ~11% stake increase. This quarter saw a ~57% selling at prices between ~$125 and ~$212. The stock currently trades at ~$282.Capital One Financial (COF): COF is a 4.23% of the portfolio position established during Q3 2022 at prices between ~$91 and ~$116 and the stock currently trades at ~$108. There was a minor ~5% trimming in the last two quarters.Liberty Broadband (LBRDK): LBRDK is a 4.15% 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. Q1 2020 saw a ~18% reduction at prices between ~$91 and ~$139. There was a ~23% stake increase in Q1 2021 at prices between ~$143 and ~$157. The stock currently trades at ~$73. The last two years saw minor trimming.Berkshire Hathaway (BRK.A) (BRK.B): Berkshire stake is now at ~3.9% of the portfolio. It is a very long-term position that was the largest stake in their first 13F filing in 1999. Recent activity follows:  Q1 2018 saw a one-third selling at prices between ~$191 and ~$217. The nine quarters through Q1 2022 had seen the large stake sold down at prices between ~$169 and ~$359. Next quarter saw another one-third selling at prices between ~$268 and ~$353. The stock is now at ~$339. The last three quarters also saw minor trimming.Netflix Inc. (NFLX): NFLX is a 3.48% of the portfolio position purchased in Q4 2020 at prices between ~$471 and ~$554. There was a ~15% stake increase in Q2 2021 at prices between ~$485 and ~$555. That was followed with a ~85% stake increase in Q1 2022 at prices between ~$331 and ~$597. Next quarter also saw another ~45% stake increase at prices between ~$166 and ~$392. Q3 2022 saw an about turn: ~40% selling at prices between ~$174 and ~$249. That was followed with another ~50% reduction last quarter at prices between ~$214 and ~$320. The stock currently trades at ~$425. There was a minor ~2% trimming this quarter.The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s 13F stock holdings in Q1 2023:Source: John Vincent. Data constructed from Ruane, Cunniff, & Goldfarb's 13F filings for Q4 2022 and Q1 2023.Q4 2022 Portfolio Review video, Letter, Factsheet: Performance: Negative 30.52% vs negative 18.11% for the S&P 500 index for 2022. 12.92% vs 10.85% since 1970 inception. Increased: . Trimmed: . NEW: . Commentary: Top-ten holdings discussed based on 1/25/2023 share prices: 1) SCHW – trading at 16x EPS for 2023 – scale and client-centric approach should continue gathering assets – good to great ROE. 2) FWONK – trades at 30x EPS for 2023 – impossible to replicate global sports league – mid-teens or better earnings growth prospect. 3) UNH – trades at 19x EPS for 2023 – should grow earnings at teens rate - insensitive to broader market – policy can impact this business but full disintermediation is very unlikely. 4) UMG – mid-20s multiple of 2023 EPS – has ability to grow earnings in the teens rate for several years - benefits from USD strength – has double digit growth – 6.4% of Sequoia capital invested first through Vivendi in 2018 and then after spinoff – because of digital streaming decimation of industry in the 1990s, only recently recovered to peaks reached over 2 decades ago – streaming now over half of revenues – return of live concerts is a tailwind. 5) ICE – 19x EPS for 2023 - developing a mortgage technology business – double digit EPS growth for years likely. 6) Eurofins Scientific – 19x EPS for 2023 - high-margin COVID related testing activity subsided and that has hurt results – still they are world leaders in food, environmental, and pharma testing - double digit growth likely for many years. 7) GOOG – 18x EPS for 2023 – regulation is the biggest risk. 8) Constellation Software – 29x EPS for 2023 - exceptional acquirer – mid-teens compounding likely. 9) ELV – 15x 2023 EPS - previously Anthem – best 2022 performer – similar to UNH – 2017 management change has been a tailwind – trades at a significant discount to UNH although we prefer UNH business - . 10) CACC – 8x 2023 EPS – has bought back one-third oof shares outstanding in the last 5 years - lender of last resort for subprime credit - earnings depends on the size and performance of its book of outstanding loans – 2022 was good for collections but bad for new underwriting – loan volumes should normalize as tightness in the auto market abates – regulatory risk - .Note:  is an affiliated but separate business that invests in early stage. They also have a long-term structure whereby they hold public businesses as well once their portfolio companies do a successful IPO – DASH, U, etc. are examples. Related article from 6/2022 -Regulatory filings from 11/29/2022 to 2/18/2023: 13G/A – 2/14 – CACC – 799K shares – 6.18% of business."