"Tracking Ruane, Cunniff, & Goldfarb’s Portfolio – Q4 2021 Update"
"Ruane, Cunniff, & Goldfarb’s 13F portfolio value increased from $11.13B to $11.71B this quarter. The number of positions increased from 33 to 34.They increased Wayfair while reducing Credit Acceptance and Berkshire Hathaway.The top three positions are Alphabet, UnitedHealth, and CarMax and they add up to ~26% 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 2/14/2022. Please visit our  article for an idea on their investment philosophy and our  for the moves during Q3 2021.This quarter Ruane, Cunniff, & Goldfarb’s 13F portfolio value increased from $11.13B to $11.71B. The number of holdings increased from 33 to 34. 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 ~26% while the top five are at ~40% of the 13F assets: Alphabet, UnitedHealth, CarMax, Meta Platforms, and Taiwan Semi.The firm is best known as the investment advisor of the Sequoia Fund (SEQUX) which has a venerable ~51-year track record (July 15, 1970 inception, 13.99% annualized return compared to 11.50% 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 ~2%. 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), Prosus NV (PROSY), Rolls-Royce Holdings plc (RYCEY), 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 Increases:Wayfair Inc. (W): W is a 5.12% of the 13F portfolio stake purchased in Q3 2019 at prices between $106 and $152. Next quarter saw a ~40% stake increase at prices between $80 and $118. That was followed with another ~30% increase in Q1 2020 at prices between ~$24 and ~$110. The four quarters through Q1 2021 saw a ~75% reduction at prices between ~$47 and ~$346. Last quarter saw a ~80% stake increase at prices between ~$239 and ~$317. That was followed with a one-third increase this quarter at prices between ~$190 and ~$280. The stock currently trades at ~$125.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 next quarter at prices between $138 and $164.Stake Decreases:Alphabet Inc. (GOOG) (GOOGL): GOOG is the largest 13F stake at 9.84% 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. That was followed with a ~60% reduction over the six quarters through Q4 2020 at prices between ~$1057 and ~$2138. The stock currently trades at ~$2736. Last four quarters have also seen minor trimming.UnitedHealth (UNH): The large (top three) ~8% UNH position 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. The stock currently trades at ~$506. Last five quarters have seen only minor adjustments.CarMax Inc. (KMX): KMX is currently the third-largest stake in the 13F portfolio at 7.75%. 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 ~$105. Last few quarters have seen only minor adjustments.Meta Platforms (FB) previously Facebook: 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. Q1 2021 saw a ~13% stake increase at prices between ~$246 and ~$299. The stock currently trades at ~$217 and it is now at 7.60% of the portfolio. There was a ~10% stake increase last quarter while this quarter there was minor trimming.Taiwan Semi (TSM): The top-five 7.17% 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. The stock currently trades at ~$107. Q1 2021 saw a ~12% selling while last quarter saw a ~20% stake increase. There was marginal trimming this quarter.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.Micron Technology (MU) and Anthem Inc. (ANTM): MU is a 6.19% of the portfolio position built over the last two quarters at prices between ~$74 and ~$96 and the stock currently trades at ~$79. The ~7% ANTM stake was established last year at prices between ~$288 and ~$402 and it is now at ~$478. There was a minor ~3% trimming this quarter in both stakes.Charles Schwab (SCHW): SCHW is a ~6% portfolio stake purchased in Q2 2016 at a cost-basis of ~$29. Q1 2020 saw a ~40% stake increase at prices between $28.50 and $49. The stock is now at ~$90. There was a ~17% selling in Q2 2020 at prices between $32.50 and $43. Last six quarters also saw minor 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 stock is now at ~$60 and the stake is at 5.92% 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 next quarter at prices between $40 and $46. Last two years have seen only minor adjustments.Note: their ownership stake in Formula One Group is ~5%.Credit Acceptance Corp. (CACC): CACC is a 5.25% 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. Last quarter saw a ~18% selling at prices between ~$438 and ~$670. That was followed with a one-third reduction this quarter at prices between ~$582 and ~$696. The stock is now at ~$517.Note: They have a ~6% ownership stake in Credit Acceptance Corp.Liberty Broadband (LBRDK): LBRDK is a 4.92% 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 ~$141. Last three quarters saw minor trimming.Intercontinental Exchange (ICE): The ~4% ICE stake was purchased in Q3 2020 at prices between ~$92 and ~$107 and the stock currently trades at ~$137. Last few quarters have seen only minor adjustments.Netflix Inc. (NFLX): NFLX is a ~4% of the portfolio position purchased in Q4 2020 at prices between ~$471 and ~$554 and the stock currently trades well below that range at ~$381. There was a ~15% stake increase in Q2 2021 at prices between ~$485 and ~$555. Last two quarters saw minor trimming.Note: the Netflix investment thesis is based around the idea that as the global trend toward subscription-based streaming video consumption accelerates, the leaders will be more profitable than the leaders of the cable era.Walt Disney (DIS): DIS is a fairly large 3.71% of the portfolio position established in Q2 2020 at prices between $94 and $127 and the stock currently trades at ~$140. Last few quarters have seen only minor adjustments.Jacobs Engineering Group (J): J is a 3.49% 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 ~$141. Last two quarters also saw minor trimming.Berkshire Hathaway (BRK.A) (BRK.B): Berkshire stake is now at 3.61% 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. Last two years have seen another ~80% reduction at prices between ~$169 and ~$300. The stock is now at ~$342.The spreadsheet below highlights changes to Ruane, Cunniff, & Goldfarb’s 13F stock holdings in Q4 2021:Source: John Vincent. Data constructed from Ruane, Cunniff, & Goldfarb's 13F filings for Q3 2021 and Q4 2021.Q3 2021 Portfolio Review video, Letter, Factsheet & Nov 4 Investor Day: Performance: 17.25% thru YTD Q3 2021 vs 15.92% for the S&P 500 index. 13.91% vs 11.33% since 1970 inception through Q3 2021. 18.8% vs 18.3% since new investment committee began on 6/30/2016. Cash: ~2%. Increased: UMG, CarMax, Facebook, Prosus, TSMC, and Wayfair. Trimmed: Credit Acceptance. Sold: Arista Networks, Fidelity National Information Systems, Hiscox, and Vivendi . New:  . Commentary: Credit Acceptance – CACC - added in low 300 & after MA litigation trimmed at 600+ - CEO retirement replacement by CFO. Wayfair – W – pandemic tailwind – managed turmoil extremely well – Amazon is a strong competitor – Q2 sales cooled but is up 65% YoY. Some impact is transitory – their advantage compared to others have increased. Eurofins Scientific – 25M PCR tests - ~$1B revenue – stock doubled in less than 2 years – valuation is now demanding – difficult & cyclic industry – so, redeploying. FIS – never grew to full size. Banking doing well but merchant solutions side is facing headwinds – impact of pandemic. CarMax, Facebook, and Wayfair were better positioned and so used cash from sale to add to those. China Risk – Prosus is unique and the only exposure – holding company but economics is from investment in Tencent. There is a discount to Tencent through Prosus. Lost $1T in 6 months due to CCP concerns. Minors in China restricted to use games only a few hours a week – we are monitoring closely for permanent changes there that could impact. Vivendi/UMG – transformed media conglomerate position to a pure-play record label stake. Best run and first to embrace digital media. Benefits from Spotify, Amazon Music, YouTube, Apple Music, etc. Also benefiting from user-generated content from Roblox, TikTok, and Facebook. Platform agnostic. Expects double-digit earnings growth for many years. Surpassed expectations so far. CarMax – record sales but expectations were more and so gave back gains – 30% up YTD still – omnichannel is where we focus on – we believe they are making great progress – 16% increase in unit volumes compared to two years ago. SG&A elevated – 80% vs 70% historically – noise in quarterly results – pandemic, etc. Mangement expects it to decline over time. Multi-year effort to omnichannel takes investment and we don’t mind the extra spending…Regulatory filings from 9/28/2021 to 11/29/2021: None."