"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q1 2017 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased marginally from $10.64B to $10.60B. The number of positions decreased from 92 to 88.They added Priceline Group, Credit Acceptance Corp., Fiat Chrysler Auto, and Liberty Media Formula One during the quarter.The top three positions are Berkshire Hathaway, TJX Companies, and Alphabet Inc. and they add up to ~27% 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 05/12/2017. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q4 2016.This quarter, Ruane, Cunniff, & Goldfarb’s US long portfolio value decreased marginally from $10.64B to $10.60B. The number of holdings decreased from 92 to 88. 35 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 27.20% while the top five are at 37.76% of the US long assets: Berkshire Hathaway, TJX Companies, Alphabet Inc., CarMax Inc., and Dentsply Sirona.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable 46-year track record. Their cash-allocation is currently at ~10%. The following top-ten stakes in Sequoia’s portfolio are not in the 13F report as they are not 13F securities: Constellation Software 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:Priceline Group (PCLN), Credit Acceptance Corp. (CACC), and Fiat Chrysler Auto (FCAU): These are the three new stakes this quarter. The 2.10% of the portfolio PCLN position was purchased at prices between $1477 and $1789 and the stock currently trades at $1818. CACC is a 1.82% stake established at prices between $185 and $221 and it currently goes for $213. The small ~1% FCAU position was purchased at prices between $9.50 and $11.60 and the stock is now at $10.87.Stake Disposals:MakeMyTrip (MMYT) and Yandex NV (YNDX): These very small (less than ~0.5% of the portfolio each) stakes were disposed of this quarter.Note: They had a ~4.5% ownership stake in MMYT as of Q4 2016.Stake Decreases:Berkshire Hathaway (BRK.A) (BRK.B): BRK.B is the largest position at 14.03% 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 $163. Last quarter saw a ~10% trimming at prices between $143 and $167 and that was followed with a ~30% selling this quarter at prices between $159 and $177.TJX Companies (TJX): TJX is a large (top three) ~7% 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 $77.31. Ruane is continuing to harvest huge long-term gains. There was a ~5% trimming this quarter.Alphabet Inc. (GOOG) (GOOGL): GOOG is a large (top three) 6.17% 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 $932. There was a very minor ~5% increase last quarter and that was followed with a ~4% trimming this quarter.CarMax Inc. (KMX): KMX is a top five stake at 5.42% of the portfolio. It was purchased in Q2 2016 at prices between $46 and $56 and increased by ~70% last quarter at prices between $48.50 and $66. The stock is now at $59.39. There was minor trimming this quarter.Note: Their Q4 2016 investor letter revealed KMX cost-basis as $51.10.Dentsply Sirona Inc. (XRAY): XRAY is a top five 5.14% 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 last quarter at prices between $55.50 and $61. The stock is now at $61.65. For investors attempting to follow Ruane, XRAY is a very good option to consider for further research. There was a ~4% trimming 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.MasterCard Inc. (MA): MA is a large 5.13% 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 $117 per share. Last quarter saw a ~6% trimming and that was followed with a marginal ~2% reduction this quarter.O’Reilly Automotive (ORLY): ORLY is a large 4.47% 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 $256. Last three quarters have seen minor trimming. They are harvesting huge long-term gains. The stock has had a tremendous run (~15 times return) over the holding period.Baidu Inc. (BIDU): BIDU is a fairly large 4.30% of the US long portfolio position established in Q2 2016 at prices between $160 and $196. The stock currently trades at $187. For investors attempting to follow, BIDU is a good option to consider for further research. There was marginal trimming this quarter.Amazon.com Inc. (AMZN): AMZN is a fairly large 3.69% portfolio stake established last quarter at prices between $719 and $845. The stock is now at $961. There was very minor selling this quarter.Charles Schwab (SCHW): SCHW is a medium sized 3.13% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. Last three quarters have seen minor trimming. The stock is now at $39.61.Mohawk Industries (MHK): MHK is a very long-term 2.86% 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. Last quarter saw a ~25% selling at prices between $177 and $205 and that was followed with another ~28% reduction this quarter at prices between $201 and $232. The stock is currently at $231. Ruane is harvesting long-term gains.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 2.59% of the portfolio. The stock currently trades at $53.02. Last two quarters have seen a combined ~10% trimming.Jacobs Engineering (JEC) and Waters Corp. (WAT): These two ~2.5% portfolio stakes saw minor trimming this quarter. WAT and JEC are long-term stakes first purchased in 2011 and 2012 respectively.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 $489. Last three quarters have seen minor selling.Fastenal Company (FAST): FAST is a 2.17% of the portfolio stake. The original position is 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 current position is at ~4.5M shares. The stake saw consistent selling every quarter last year: ~60% combined reduction at prices between $37.50 and $49. The pattern continued this quarter: another ~50% selling at prices between $46 and $52. The stock is currently at $44.74. They are harvesting huge long term gains.Primerica Inc. (PRI): PRI is a ~2% 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. Last quarter saw a ~25% selling at prices between $53 and $72.50 and that was followed with a ~17% selling this quarter at prices between $70 and $83.50. The stock is now at $76.55.Note: Their ownership stake in PRI is at ~5.5%.Costco Wholesale (COST), Danaher Corp. (DHR), Goldman Sachs (GS), JP Morgan Chase (JPM) & WTS , Omnicom Group (OMC), Perrigo Company plc (PRGO), Visa Inc. (V), and Tiffany & Co. (TIF): These are small (less than ~1.5% of the portfolio each) stakes that saw reductions during the quarter.Stake Increases: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 $33.15. The stake is fairly large at 3.7% of the portfolio.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 and the position is now at 1.77% of the portfolio. The stock currently trades near the low end of their purchase price ranges at $43.20. For investors attempting to follow, WUBA is a good option to consider for further research. Last two quarters have seen minor increases.Capital One Financial (COF): COF is a very small 1.32% position purchased last quarter at prices between $71 and $91. This quarter saw another roughly one-third increase at prices between $82 and $96. The stock currently trades at $79.40.JD.com (JD), Emcor Group Inc. (EME), and Builders FirstSource (BLDR): These very small (less than ~1% of the portfolio each) stakes were increased this quarter.Note: They have a ~5% ownership stake in BLDR.Kept Steady:IAC Interactive (IACI): The very small 0.84% IACI stake was left untouched this quarter.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 Q1 2017:Info from Q4 2016 Letter: Performance: Down 6.9% compared to Up 11.96% for the S&P 500 Index. 10-year alpha is a disappointing MINUS 1% (5.96% annualized vs 6.95%). The underperformance is attributable to two large stakes: Valeant & the large cash position. Long-term holding style: Of the 27 securities in the portfolio, 16 have been held for more than 5 years (by assets, 40% have been held for more than 10 years). Very good performance of new stakes made in 2016: KMX (CarMax - largest capital commitment for the year, average cost-basis $51.10), Chipotle, Charles Schwab (42% increase thru EOY 2016 from cost-basis), Wells Fargo (~9% increase thru EOY 2016 from cost-basis). CMG has not performed that well yet (down 13% thru EOY 2016 from the time of purchase). New2017 stake in Liberty Media (FWONK) - participated in Liberty’s acquisition of Formula One and acquired the shares at a discounted price of $25 on January 24th. Also small Amazon investment mentioned. Plans to make use of dry powder in the coming years - in a torrid 2009-2016 bull market, held 15-20% cash which was acknowledged as a mistake. Number of securities down from 39 at start of year to 27 at EOY2016 - realized large capital gains, even though not ideal in a down year. Top ten holdings below:* There is some confusion about Constellation Software - my tracking update showed there was a disposal in Q1 2016. Apparently, it probably is not a 13F security and so should update accordingly. Similarly, Rolls-Royce is not listed as it is not a 13F security."