"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q4 2016 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased from $10.65B to $10.64B. The number of positions decreased from 100 to 92.They added Amazon and substantially increased CarMax & Dentsply Sirona during the quarter.The top three positions are Berkshire Hathaway, TJX Companies, and CarMax 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 US stock portfolio on a quarterly basis. It is based on their regulatory  filed on 02/13/2017. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q3 2016.This quarter, Ruane, Cunniff, & Goldfarb’s US long portfolio value decreased marginally from $10.65B to $10.64B. The number of holdings decreased from 100 to 92. 34 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 holdings are at 30.14% while the top five are at 41.04% of the US long assets: Berkshire Hathaway, TJX Companies, CarMax Inc., Alphabet 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. 2016 performance however was underwhelming: down ~7% compared to up ~12% for the S&P 500 - Valeant (VRX) and the large cash position were mentioned as the main detractors. The cash-allocation is now at ~10% and the Valeant stake was eliminated last quarter.Note: The following top-ten stakes in the Sequoia Fund are not in the 13F portfolio 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:Amazon.com Inc. (AMZN): AMZN is a fairly large 3.15% portfolio stake established this quarter at prices between $719 and $845. The stock is now at $837.Capital One Financial (COF): COF is a very small ~1% position purchased this quarter at prices between $71 and $91 and the stock currently trades at $89.03.Stake Disposals:Fortive Corp. (FTV): The minutely small 0.36% portfolio stake came about as a result of the spinoff of Fortive from Danaher that closed in July 2016. They had ~1.5M shares of Danaher for which they received 750K shares in the ratio 2:1. Regular-way trading started at ~$49.50 and the stock currently goes for $57.53. The disposal this quarter happened at prices between $47.50 and $56.Wal-Mart Stores (WMT): The small 0.61% Wal-Mart position was disposed of this quarter. It was a long-term stake held for over a decade. Over the holding period, Wal-Mart slightly underperformed the S&P 500 index. Sequoia’s Q3 2016 investor update had the following on the exit: “We think higher wages for its entry level workers, continued growth at Amazon and the need to invest heavily in e-commerce will put pressure on Walmart’s earnings over the next few years.”Stake Decreases:Berkshire Hathaway (BRK.A) (BRK.B): BRK.B is the largest position at 17.07% of the portfolio. The last significantly activity was in 2012 when there was a one-third increase at prices between $76 and $92. The stock is now at $166. Last four quarters had seen minor reductions while this quarter saw a ~10% further trimming at prices between $143 and $167.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 so far at prices between $67.50 and $83. The stock is now at $76.90. Ruane is continuing to harvest huge long-term gains.MasterCard Inc. (MA): MA is a large 4.79% 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 $108 per share. Last quarter had seen a ~5% increase while this quarter saw a ~6% trimming.O’Reilly Automotive (ORLY): ORLY is a large 4.76% 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 $269. Last two 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.Fastenal Company (FAST): FAST is a fairly large 4.15% 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 ~9.4M shares. Q1 2016 saw a ~22% selling at prices between $36.50 and $50 and that was followed with another one-third reduction in the following quarter at prices between $43 and $49. There was another ~18% selling this quarter at prices between $38 and $49. The stock is currently at $50.13. They are harvesting huge long term gains.Note: Their ownership stake in the business is at ~3.3%.Mohawk Industries (MHK): MHK is a very long-term 3.46% 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. This quarter saw a ~25% selling at prices between $177 and $205. The stock is currently at $224.Note: They have a ~2.5% ownership stake in the business.Charles Schwab (SCHW): SCHW is a medium sized 3.13% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. Last two quarters have seen minor trimming. The stock is now at $40.72.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 2.70% of the portfolio. The stock currently trades at $57.08. Last quarter saw a ~4% increase while this quarter saw a ~5% 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.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. This quarter saw a ~25% selling at prices between $53 and $72.50. The stock is now at $80.15.Note: Their ownership stake in PRI is at ~6.5%.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 $414. Last two quarters have seen minor selling.Danaher Corp. (DHR): DHR is a very small 1.27% of the portfolio position. The stake saw a ~32% increase over Q2 & Q3 2016 at prices between $71 and $82. The stock is now at $84.19. There was a ~5% trimming this quarter.Note: In July 2016, DHR completed the spinoff of Fortive (FTV). Danaher stockholders received one share of Fortive common stock for every two shares of Danaher held. The prices quoted above are adjusted for this transaction.Perrigo Company plc (PRGO): PRGO is a very small ~1% of the portfolio position first purchased in Q3 2010 at prices between $56 and $66. The position was kept almost steady till Q2 2015 when there was a ~14% reduction at prices between $163 and $204. Q2 2016 also saw a ~10% reduction at prices between $87 and $131. Last quarter saw a ~12% increase while this quarter saw a similar reduction. The stock currently trades at $80.16.JP Morgan Chase (JPM) & WTS: The ~1% JPM stake was purchased in Q1 2016 when the share price varied between $53 and $66 and was increased by ~70% the following quarter when the stock price varied between $57 and $66. It is now at $88.15. There was a ~20% reduction this quarter as the shares traded between $66.50 and $87.Omnicom Group (OMC), Goldman Sachs (GS), Visa Inc. (V), and Tiffany & Co. (TIF): These are small (less than ~1.5% of the portfolio each) stakes that saw marginal reductions during the quarter.Emcor Group Inc. (EME), Costco Wholesale (COST), MakeMyTrip (MMYT), JD.com (JD), & Praxair (PX): These very small (less than ~1% of the portfolio each) stakes saw further reductions this quarter.Note: They have a ~4.5% ownership stake in MMYT.Stake Increases:CarMax Inc. (KMX): KMX is now a top three stake at ~6% of the portfolio. It was purchased in Q2 2016 at prices between $46 and $56 and increased by ~70% this quarter at prices between $48.50 and $66. The stock is now at $67.50.Note: Their Q4 2016 investor letter revealed KMX cost-basis as $51.10.Alphabet Inc. (GOOG) (GOOGL): GOOG is a large (top five) ~6% 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 $819. There was a very minor ~5% increase this quarter.Dentsply Sirona Inc. (XRAY): XRAY is a top five ~5% 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. Last quarter saw a ~75% increase at prices between $59 and $65 and that was followed with another ~12% increase this quarter at prices between $55.50 and $61. The stock is now at $58.84. For investors attempting to follow Ruane, XRAY is a very good option to consider for further research.Note: XRAY was profiled in Sequoia’s Q3 2016 investor letter. They are very bullish on the merger and believe management under Jeff Slovin is the right team. The original position in Sirona Dental was from 2011 and they have large unrealized gains.58.com Inc. (WUBA): WUBA was a minutely small 0.4% stake in Q2 2015. The following quarter saw a ~130% increase at prices between $41 and $65. The stake had seen minor trimming since. Last quarter saw a two-thirds increase at prices between $44 and $55 and the stake is now at 1.38% of the portfolio. The stock currently trades well below the low end of their purchase price ranges at $32.72. For investors attempting to follow, WUBA is a very good option to consider for further research. This quarter saw a very minor ~5% increase.Builders FirstSource (BLDR) and IAC Interactive (IACI): These very small stakes (less than 0.75% of the portfolio each) were increased during the quarter. The positions are still too small to indicate a clear bias.Note: They have a ~4.5% ownership of BLDR.Kept Steady:Baidu Inc. (BIDU): BIDU is a fairly large ~4% of the US long portfolio position established in Q2 2016 at prices between $160 and $196. The stock currently trades at $184. For investors attempting to follow, BIDU is a good option to consider for further research.Yandex NV (YNDX): YNDX is a very small 0.51% stake kept steady 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: Their 2016 letter disclosed a new stake in Liberty Media (FWONK). 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 $31.43.The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s US stock holdings in Q4 2016:Info from Q3 2016 Letter: 10.2% cash allocation reflects full market valuation. Fund reopened for investors on the Charles Schwab Financial Services platform - also open for direct investment through transfer agent. XRAY increase - SIRO was a holding since 2011 - very bullish on the merger and believes management under Jeff Slovin is the right team. WMT - exited in early October - over 11-year holding period slightly underperformed S&P500. Exit thesis: “We think higher wages for its entry level workers, continued growth at Amazon and the need to invest heavily in e-commerce will put pressure on Walmart’s earnings over thenext few years.” WFC - untouched but under review - reputational damage for sure - currently believes it is a valuable franchise & valuation is low."