"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q4 2017 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value increased ~7% from $11.42B to $12.20B. The number of positions decreased from 69 to 66.They increased Amazon.com and JD.com during the quarter.The top three positions are Alphabet, Berkshire Hathaway, and Amazon.com and they add up to ~34% 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 02/14/2018. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q3 2017.This quarter, Ruane, Cunniff, & Goldfarb’s 13F portfolio value increased ~7% from $11.42B to $12.20B. The number of holdings decreased from 69 to 66. 30 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 ~34% while the top five are at ~44% of the US long assets: Alphabet, Berkshire Hathaway, Amazon.com, MasterCard, and Dentsply Sirona.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable 47-year track record (July 15, 1970 inception, 13.65% annualized return compared to ~11% for the S&P 500 index). For 2017, the fund was up 20.07% compared to 21.83% for the S&P 500 index. Their cash-allocation is currently at ~10%. After new management took over in Q1 2016, the portfolio has seen a significant shift to information & services businesses from asset-intensive manufacturing & retail. 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 .Stake Disposals:Baidu Inc. (BIDU): BIDU was a very small 0.66% of the US long portfolio position as of last quarter. The original position was established in Q2 2016 at prices between $160 and $196. There was a 43% selling in Q2 2017 at prices between $172 and $192 and that was followed with a ~80% reduction last quarter at prices between $179 and $248. The disposal this quarter was at prices between $230 and $273. The stock currently trades at $251.Stake Decreases:Berkshire Hathaway (BRK.A) (BRK.B): BRK.B is the second-largest position at 12.28% 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 $203. Q4 2016 saw a ~10% trimming at prices between $143 and $167 and that was followed with a ~30% selling in the following quarter at prices between $159 and $177. Q2 2017 also saw a ~20% reduction at prices between $161 and $172. There was a ~5% trimming last quarter and that was followed with a ~3% trimming this quarter.MasterCard Inc. (MA): MA is a large (top five) ~5% 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 $176 per share. There was a ~15% selling last quarter at prices between $121 and $143 and that was followed with a marginal reduction this quarter.Dentsply Sirona Inc. (XRAY): XRAY is a large (top five) 4.78% 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 $57.67. For investors attempting to follow Ruane, XRAY is a good option to consider for further research. There was marginal trimming this quarter.Note: The original position in Sirona Dental was from 2011 and they have large unrealized gains.TJX Companies (TJX): TJX is a fairly large 4.75% 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 in 2016: ~45% reduction at prices between $67.50 and $83. The stock is now at $77.96. There was a ~17% selling last quarter at prices between $67 and $74. Ruane is continuing to harvest huge long-term gains. This quarter saw a marginal reduction.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 position is now at 4.15% of the portfolio. There was marginal trimming in the last two quarters. The stock is now at $34.34.Note: they have a ~7.5% ownership stake in Liberty Media Formula One.Fiat Chrysler Auto (FCAU): The 3.66% FCAU position was purchased in Q1 2017 at prices between $9.50 and $11.60 and doubled the following quarter at prices between $9.70 and $11.65. There was another ~25% increase last quarter at prices between $10.50 and $18. The stock is now at $21.83. This quarter saw marginal trimming.Charles Schwab (SCHW): SCHW is a medium sized 3.50% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. There have only been minor adjustments since. The stock is now at $52.74.CarMax Inc. (KMX): KMX is a 3.49% 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. This quarter saw a ~30% selling at prices between $64 and $77. The stock is now at $62.76.Note: Their Q4 2016 investor letter revealed KMX cost-basis as $51.10. They have a 3.67% ownership stake in the business.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. There was another one-third increase last quarter at prices between $49.50 and $56. The stock currently trades at $59.17 and it is at 3.30% of the portfolio. There was marginal trimming this quarter.Mohawk Industries (MHK): MHK is a very long-term ~3% 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. Recent activity follow: Q4 2016 saw a ~25% selling at prices between $177 and $205 and that was followed with another ~28% reduction in the following quarter at prices between $201 and $232. The stock is currently at $251. There was a ~5% increase last quarter while this quarter saw marginal trimming.Jacobs Engineering Group (JEC): JEC is a ~3% long-term stake first purchased in 2012. Last major activity was in Q3 2015 when there was a ~50% stake increase at prices between $37 and $44. The stock is now at $62.35. There was a ~9% stake increase last quarter while this quarter saw marginal trimming.Credit Acceptance Corp. (CACC) and Priceline Group (PCLN): These two positions were purchased in Q1 2017 and increased significantly the following quarter. CACC is a 2.84% stake established at prices between $185 and $221 and increased by ~12% the following quarter at prices between $186 and $263. It currently goes for $318. The 2.48% of the portfolio PCLN position was purchased at prices between $1477 and $1789 and increased by ~40% the following quarter at prices between $1738 and $1911. The stock currently trades at $1907. Both positions saw marginal trimming in the last two quarters.Note: They have a 5.54% ownership stake in Credit Acceptance Corp.Visa Inc. (V): The 2.70% Visa stake saw a 53% increase in Q2 2017 at prices between $89 and $97 and that was followed with a ~13% increase last quarter. The stock is now at $123. It is a very long-term stake first purchased soon after the IPO in 2008. This quarter saw marginal trimming.O’Reilly Automotive (ORLY): ORLY is a 2.39% 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 $254. Q2 2017 saw a ~9% reduction at prices between $216 and $270 and that was followed with a ~17% selling last quarter at prices between $173 and $220. This quarter also saw a ~9% selling at prices between $203 and $251. They are harvesting huge long-term gains. The stock has had a tremendous run (~10 times return) over the holding period.Omnicom Group (OMC): The 2.28% OMC position saw a ~80% increase in Q2 2017 at prices between $80 and $86. The original position was from 2011 at prices between $36 and $50. The stock is now at $77.31. Last two quarters have seen marginal trimming.Waters Corp. (WAT): WAT is a long-term 1.80% portfolio stake first purchased in 2011 in the high-70s price-range. The positon was reduced by just over one-third last quarter at prices between $173 and $190 and the stock is now at $208.58.com Inc. (WUBA), Builders FirstSource (BLDR), Emcor Group (EME), Goldman Sachs (GS), IAC Interactive (IAC), Interactive Brokers (IBKR), and Primerica Inc. (PRI): These small (less than ~1% of the portfolio each) stakes saw reductions during the quarter.Note: They have a ~5% ownership stake in BLDR and a 2.28% ownership stake in Primerica.Stake Increases:Alphabet Inc. (GOOG) (GOOGL): GOOG is now the largest 13F stake at 14.32% 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. 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 $1127. Q2 2017 saw a ~15% increase at prices between $823 and $984 and that was followed with a two-thirds increase last quarter at prices between $899 and $980. There was another ~13% increase this quarter.Amazon.com Inc. (AMZN): AMZN is a top three 7.51% portfolio stake established in Q4 2016 at prices between $719 and $845. The stock is now at $1500. There was a ~9% trimming in Q2 2017 at prices between $885 and $1011. This quarter saw the stake almost doubled at prices between $957 and $1196.Note: Their Q4 2017 letter covered both Alphabet & Amazon.com. They believe Alphabet & Amazon.com are some of the best businesses the world has ever seen. However, earnings are masked by growth spending.JD.com (JD): The 2.25% JD position was first purchased in Q1 2016. The position has wavered. Recent activity follow: last quarter saw a one-third increase at prices between $38 and $48 and that was followed with a two-thirds increase this quarter at prices between $36.75 and $43. The stock is now at $48.35.BMC Stock Holdings (BMCH) and Wayfair Inc. (W): These two very small (less than ~1% of the portfolio each) positions saw substantial increases this quarter.Note: They have a 5.84% ownership stake in BMC Stock Holdings.Kept Steady:Capital One Financial (COF): COF is a very small 1.31% position purchased in Q4 2016 at prices between $71 and $91. Q1 2017 saw a one-third increase at prices between $82 and $96. The stock currently trades at $99.04.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.The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s US stock holdings in Q4 2017:: Performance: YTD 13.73% vs 14.24% for the S&P, Q3 2017 3.71% vs 4.48% for the S&P. 10% cash allocation. Alphabet: Added to this top-three position – rapid growth & profitability trading slightly higher than the market PE. Jacob’s Engineering – slightly increased position to ~3% of portfolio following price weakness. Wells Fargo – Increased to 3.2% - business is performing well while share price has lagged behind market. TRIMS: Chipotle, MasterCard, TJX, Waters and Constellation Software bonds – mostly a response to huge short-term price increase – for example, MA increased 40% YTD and so trimmed from 9% to 7.5% of portfolio. EXITS: Croda and Danaher – Fine companies but price fully reflect value thus prompting the exit.Regulatory Filings thru 11/14/2017: None."