"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q1 2020 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased from $8.09B to $6.24B this quarter. The number of positions decreased from 40 to 38.They increased Charles Schwab & UnitedHealth while decreasing Jacobs Engineering & Berkshire Hathaway.The top three positions are Alphabet, Berkshire Hathaway, and CarMax and they add up to ~35% 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 05/15/2020. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q4 2019.This quarter Ruane, Cunniff, & Goldfarb’s 13F portfolio value decreased ~23% from $8.09B to $6.24B. The number of holdings decreased from 40 to 38. 18 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 ~35% while the top five are at ~47% of the 13F assets: Alphabet, Berkshire Hathaway, CarMax, Arista Networks, and Charles Schwab.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable ~50-year track record (July 15, 1970 inception, 12.94% annualized return compared to 10.50% for the S&P 500 index). 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 just ~3%. The following significant stakes in Sequoia’s portfolio are not in the 13F report as they are not 13F securities: Constellation Software (CNSWF), Rolls-Royce Holdings plc (RYCEY), Vivendi (VIVHY), Hiscox Limited (HCXLF), a2Milk, Eurofin Scientific (ERFSF), Prosus NV (PROSY), and Melrose Industries plc (MLSPF). Bill Ruane was a Benjamin Graham pupil. To learn about Benjamin Graham's teachings, check out the classics  and .Stake Disposals:None.New Stakes:None.Stake Increases:CarMax Inc. (KMX): KMX is a top-three ~8% 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. 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. Last two years have seen a ~23% selling at prices between ~$45 and ~$100. The stock is now at $95.93.Note: They have a ~5.8% ownership stake in the business.Arista Networks (ANET): The large (top five) 6.50% ANET stake was primarily built last quarter at prices between $185 and $249. The stock currently trades at ~$235. There was a ~15% stake increase during the quarter.Charles Schwab (SCHW): SCHW is a top five 6.37% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. This quarter saw a ~40% stake increase at prices between $28.50 and $49. The stock is now at ~$43.UnitedHealth (UNH): The 5.66% UNH position was established last quarter at prices between $215 and $296 and increased by ~300% this quarter at prices between ~$195 and ~$305. It is now at ~$312.Credit Acceptance Corp. (CACC): CACC is a fairly large 4.78% stake established in Q1 2017 at prices between $185 and $221. The stock has doubled in the three-year holding period and currently trades at ~$483. There have only been very minor adjustments in the last few quarters.Note: They have a ~6% ownership stake in Credit Acceptance Corp.Wayfair Inc. (W): W is a fairly large 4.43% of the 13F portfolio stake purchased in Q3 2019 at prices between $106 and $152. Last quarter saw a ~40% stake increase at prices between $80 and $118. That was followed with another ~30% increase this quarter at prices between ~$24 and ~$110. The stock currently trades at ~$171.Note: Wayfair has seen a previous roundtrip. It was a very small 0.76% of the portfolio position purchased in Q1 2019 at prices between $85 and $172 and disposed last quarter at prices between $138 and $164.Booking Holdings (BKNG): The 4.32% of the portfolio BKNG stake was purchased in Q1 2017 at prices between $1477 and $1789 and increased by ~40% the following quarter at prices between $1738 and $1911. The stock currently trades at ~$1813. This quarter saw a ~20% stake increase at prices between ~$1152 and ~$2085.Stake Decreases:Alphabet Inc. (GOOG) (GOOGL): GOOG is the largest 13F stake at ~17% 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. Recent activity follows: Q2 2019 saw a one-third reduction at prices between $1036 and $1288. The stock currently trades at ~$1440. Last two quarters have seen minor trimming.Berkshire Hathaway (BRK.A) (BRK.B): BRK.B is the second-largest position at ~9% of the portfolio. It is a very long-term stake that was already their 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 pattern reversed next quarter: ~10% increase at prices between $185 and $201. The stock is now at ~$201. Last two quarters have seen a roughly one-third reduction at prices between ~$162 and ~$230.Facebook Inc. (FB): The FB position saw a whopping ~600% stake increase in Q1 2018 at prices between $152 and $193. The next two quarters had seen another ~27% increase at prices between $155 and $218. Q1 2019 saw an about turn: ~23% reduction at prices between $124 and $173. The stock currently trades at ~$231 and the stake is at 5.93% of the portfolio.  Last few quarters have seen only minor adjustments.Liberty Broadband (LBRDK): LBRDK is a 5.70% 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. This quarter saw a ~18% reduction at prices between ~$91 and ~$139. The stock currently trades at ~$135.Jacobs Engineering Group (J): J is a 5.39% 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 this quarter at prices between ~$63 and ~$104. The stock currently trades at ~$89.MasterCard Inc. (MA): MA is a 4.78% 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. Recent activity follows: Q3 2018 saw a ~22% selling at prices between $196 and $224. That was followed with a ~30% selling in Q3 2019 at prices between $257 and $292. The stock currently trades at ~$312. There was a ~10% trimming this quarter.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 stock is now at ~$36 and the stake is at 4.27% of the portfolio. The six quarters thru Q3 2019 had seen a ~18% selling at prices between $28.50 and $43 and that was followed with similar selling last quarter at prices between $40 and $46. This quarter also saw a ~7% trimming.Amazon.com Inc. (AMZN): AMZN stake was established in Q4 2016 at prices between $719 and $845. Q4 2017 saw the stake almost doubled at prices between $957 and $1196. 2018 saw a ~60% selling at prices between $1170 and $2050. H1 2019 had also seen a one-third selling at prices between $1500 and $1963. Last two quarters have seen another ~45% reduction at prices between ~$1705 and ~$2170. The stock is currently at ~$2483 and the stake is at 3.65% of the portfolio. They are realizing gains.Visa Inc. (V): Visa is a now a small 1.87% of the portfolio stake. It is a very long-term position first purchased soon after the IPO in 2008. The position was sold down consistently since Q1 2018. That quarter saw a ~30% selling at prices between $114 and $126 and that was followed with a ~22% selling in Q3 2018 at prices between $131 and $151. Q3 2019 saw another ~40% selling at prices between $169 and $186. The stock is now at ~$200. There was a ~13% trimming this quarter.Kept Steady:Taiwan Semi (TSM): The 2.33% of the portfolio TSM stake was purchased last quarter at prices between $46.50 and $59 and the stock currently trades at $55.20.The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s 13F stock holdings in Q1 2020:Quarterly Factsheet, AR, and Q4 2019 Letter: Performance: 29.12% for 2019 vs 31.49% for the index. Has hugged the index last three years – 62% vs 65% for S&P. Cash: 3% now compared to 20% since inception and 14% over the last two decades. Expects that to help with beating index by a wider margin even if the individual picks do not outperform by that wide a margin. Turnover 16% compared to 24% since inception – more tax efficient. Increased: Rolls-Royce – if Airbus A350 turns into a profit machine without the problems that plagued Boeing 787, after 18-24 months, they should generate huge cash-flows for the following two decades. Trimmed on valuation: Alphabet, Amazon, Berkshire, Booking, Carmax, Constellation, Formula One, Jacobs, Liberty Broadband, and MasterCard. Sold: due to changes in their fundamental assessments – Electronic Arts & Vopak. Also Mohawk – sold out this quarter, same thesis regarding flooring industry dynamics. New: for 2019 – Arista Networks (ANET) in Q4 2019, Eurofin Scientific (ERFSF) – testing, inspection, certification in food safety, environmental monitoring & pharma – fragmented market consolidation should yield growth – owner Gilles Martin has one-third control – 40% gain already, Wayfair (simultaneous Expansion to the European business, National Logistics, and Furniture category expansion resulted in obscuring unit expansion), and two others that remain undisclosed.Note: Around May 15, 2020 is the Investor Day. Be sure to look in the transcript when writing the Q1 2020 update…Regulatory filings thru 2/26/2020: 13G/As – 2/14 – W - 3.99M shares – 6.07% of business, KMX – 7.94M shares – 4.86% of business, FWONK – 10.15M shares – 4.99% of business, BMCH – 0, CACC – 1.15M shares – 6.12% of business, BLDR – 73K shares – 0.06% of business."