Ruane Cunniff

Ruane Cunniff

Last Update: 02-14-2017

Number of Stocks: 92
Number of New Stocks: 11

Total Value: $10,642 Mil
Q/Q Turnover: 8%

Countries: USA SGP
Details: Top Buys | Top Sales | Top Holdings  Embed:

Ruane Cunniff Watch

  • Ruane Cunniff Sells Berkshire and Praxair, Exits Walmart

    Ruane, Cunniff & Goldfarb Inc. was founded by William Ruane, and Ruane Cunniff (TradesPortfolio)'s current investment committee is directed by Richard Cunniff. He manages a portfolio composed of 92 stocks with a total value of $10.642 billion. During the fourth quarter the guru sold shares in the following stocks:


    The guru reduced its holding in Berkshire Hathaway Inc. Class A (BRK.A) by 19.71% with an impact of -2.39% on the portfolio.

      


  • Valeant Pharmaceuticals Is a Potential Sell

    Valeant Pharmaceuticals Inc. (NYSE:VRX) reported a net loss of $515 million during fourth-quarter 2016 based on generally accepted accounting principles and an adjusted EBITDA of $1.05 billion. For full-year 2016, the company reported a GAAP net loss of $2.4 billion, which translates to a loss per share of approximately $6.94. These values suggest that Valeant has a weakening financial outlook for 2017.


    Brief summary of earnings report

      


  • David Rolfe Invests in Tractor Supply, Fastenal

    Wedgewood Partners’ David Rolfe (Trades, Portfolio) gained two new holdings and divested another in the final quarter of 2016. He established positions in Tractor Supply Co. (NASDAQ:TSCO) and Fastenal Co. (NASDAQ:FAST). He sold out of Stericycle Inc. (NASDAQ:SRCL).


    With over 29 years of portfolio management experience, Rolfe serves as the chief investment officer at Wedgewood. The firm believes significant long-term wealth is created by investing as “owners” in a company. Wedgewood seeks highly profitable companies that offer a dominant product or service, consistently grow earnings, revenues and dividends and have strong management teams that prioritize shareholders. The current portfolio is composed of 36 stocks and is valued at around $4.1 million.

      


  • Ruane Cunniff Comments on Liberty Media

    At the very end of the year, we found what we believe will be another good use for our dry powder when we joined a select group of investors in purchasing a stake in Liberty Media Group, a John Malone-affiliated company, as part of Liberty’s acquisition of the Formula One auto racing business. The deal closed on January 23, and Sequoia purchased 4.7 million shares at a discounted price of $25 per share.

    Recently, Liberty Media (NYSE:BATRR) has traded above our cost basis in the public market. Sequoia’s allocation will be restricted for several months, meaning we won’t be able to sell the shares. During that time, accounting rules require us to price the stock at a modest discount to its market price to reflect its illiquidity. Undoubtedly, the share price will fluctuate during the lock-up period, but we’re delighted to have acquired shares at what we believe is an attractive price. More importantly, we believe Formula One is a powerful global brand and Liberty will be an excellent manager. Our expectation is to own the shares for years.

    Formula One is the leading global automotive sport with an estimated 400 million fans around the world. While Formula One has grown considerably under the leadership of Bernie Ecclestone over the last three decades, we believe new management has significant opportunities to further improve and grow the sport. Liberty Chairman John Malone and CEO Greg Maffei have exceptional track records as capital allocators and value creators, and we believe they have found a superb manager in Chase Carey to run Formula One. Mr. Carey had successful tenures at Fox Broadcasting, DirecTV, News Corp. and 21st Century Fox and has particular expertise in sports businesses. We believe there is room to improve revenue from broadcast, advertising and sponsorship sources, while also developing a digital business that captures younger fans. Importantly, our return assumptions do not depend on the sport succeeding in immature markets such as the US and China.



    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund 4th quarter shareholder letter.
      


  • Ruane Cunniff Comments on Amazon

    In the fall, we exited our small position in Walmart and replaced it with a similarly small position in Amazon (NASDAQ:AMZN). The company’s e-commerce operation (Amazon.com) and its cloud computing platform (Amazon Web Services) are two of the most advantaged businesses we’ve analyzed in quite some time. Both are growing fast and have miles of runway ahead of them. And they are run by arguably the most talented, customer-focused and long term-oriented businessman of his generation.

    At a consolidated level, Amazon produces very little in the way of reported profits. Amazon Web Services, whose financials are disclosed separately, earns very rich margins, but the larger e-commerce business reports scant earnings. Our research indicates that the company’s e-commerce business has substantial earnings power that is being masked by a variety of ambitious growth investments. The Fund purchased shares at what we believe to be a reasonable multiple of underlying earnings power excluding those investments. Estimating the long-term potential of Amazon’s many investments is an inherently imprecise exercise, which is why the investment thus far has been a small one.


    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund 4th quarter shareholder letter.
      


  • Ruane Cunniff Comments on Chipotle

    Chipotle (NYSE:CMG) has been a weak performer, down 13% since purchase through the end of 2016. We knew Chipotle faced a long road to recovery after several outbreaks of food-borne illnesses frightened customers away, but we were attracted by the enormous potential of the business, which could grow for many years and generate high returns if the executive team manages the recovery adeptly. Chipotle is making changes to management and its board of directors, including adding a director who played a key role in the turnaround at McDonald’s a decade ago. Recently reported sales figures for December showed encouraging gains in customer traffic, but we are watching carefully, as the pace of recovery thus far has fallen short of our initial expectations.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund 4th quarter shareholder letter.
      


  • Ruane, Cunniff & Goldfarb's Sequoia Fund 4th Quarter Shareholder Letter

    Dear Shareholder:

      


  • O’Reilly Automotive: Does Debt Diminish Its Value Stock Status?

    O’Reilly Automotive Inc. (NASDAQ:ORLY) currently holds a spot on the Undervalued Predictable screener list at GuruFocus due to a couple of recent dips in the share price:


    ORLY 3 month share price

      


  • John Rogers Boosts Berkshire, Rockwell Collins, Tiffany

    John Rogers (Trades, Portfolio) founded Ariel Investment LLC in 1983, and the firm now has a total value of $8.267 billion. During the third quarter the guru’s largest buys were the following:


    The investor raised his position in Berkshire Hathaway Inc. Class B (BRK.B) by 151.06% with an impact of 0.44% on the portfolio.

      


  • 21 Questions for Bluegrass Capital's Founder

    Thank you for your interest in me. I am a longtime follower of your site and hope my responses prove useful to at least a few of your readers. I look forward to other interviews in this series.


    19. Describe some of the biggest mistakes you have made value investing. What are your three worst investments? What did you learn and how do you avoid those mistakes today?

      


  • Ruane Cunniff Makes One Significant Buy

    On Tuesday, Ruane Cunniff (Trades, Portfolio) disclosed its first quarterly update since losing significantly on a position in Valeant Pharmaceuticals (NYSE:VRX), a fast-growing drug maker accused of price gouging and a dubious relationship with a pharmacy. The firm’s Sequoia Fund made only one large purchase during the third quarter, Dentsply Sirona (NASDAQ:XRAY).


    Sequoia owned Sirona, the original company, since 2011, according to its third-quarter letter. Sirona, a dental products maker, merged with Dentsply, a dental consumables company, in February to create the world’s largest professional dental company, supplying to labs, dental offices and clinics worldwide. Dentsply Sirona has a global headquarters in York, Pennsylvania, international headquarters in Salzburg, Austria, and a market cap of $13.44 billion.

      


  • Ruane Cunniff Comments on Wells Fargo

    We did not add to or reduce our 2% position in Wells Fargo (NYSE:WFC) during the quarter, but recent events prompt us to share our thoughts on the bank with you. News emerged in September that since 2011, Wells Fargo employees had created up to 2.1 million sham customer accounts in order to meet aggressive sales quotas set by bank management. While this behavior caused the bank to fire some 5,300 employees over a period of five years, the bank was distressingly slow to change the incentives that prompted this bad behavior. We believe that Wells management has damaged the bond of trust the bank had built with its customers, and that senior executives should be held accountable for the practices their policies engendered. That said, it is important to note that only about 5% of the unauthorized accounts had fees associated with them—and that these fees came to about $2.6 million in total. Wells Fargo is an enormous enterprise, with 93 million customer accounts and $22.4 billion of net income in the past year. The sham accounts did not make money for Wells, and more likely cost it money as the bank paid bonuses to employees who opened inactive accounts. Wells has suffered deep reputational damage and we will keep a watchful eye on the remedies proposed by management, but we believe Wells remains an attractive franchise with a low valuation.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund third quarter 2016 letter to shareholders.  


  • Ruane Cunniff Comments on Walmart

    We reduced our holding in Walmart (NYSE:WMT) during the quarter, and exited the stock in early October. Over our 11-year holding period, Walmart generated a positive total shareholder return but modestly underperformed the S&P 500 Index. Walmart remains a formidable company, but over the past decade its dominance has waned. International expansion has never generated good returns for shareholders, while Walmart has struggled to develop a winning e-commerce strategy. 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.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund third quarter 2016 letter to shareholders.  


  • Ruane Cunniff Comments on Trimble Navigation

    We sold our few shares of Trimble Navigation (NASDAQ:TRMB). While Trimble is an interesting business, it has diversified away from its core GPS offerings for agricultural and construction machinery into a host of new areas, few of which have borne fruit. As Trimble amounted to less than 1% of the Fund’s holdings and we weren’t excited about its diversification efforts, we exited. Over our six-year holding period, Trimble generated a positive return but underperformed the Index.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund third quarter 2016 letter to shareholders.  


  • Ruane Cunniff Comments on Dentsply Sirona

    After a busy second quarter in terms of portfolio activity, the third quarter was far quieter. Our only significant purchase was of the dental supply leader Dentsply Sirona (NASDAQ:XRAY). We’ve owned predecessor company Sirona since 2011, and it has been an excellent performer. Our original investment thesis was based on Sirona’s leadership in digital dentistry. Sirona is strong in digital equipment, and its product line includes CEREC, an incredibly innovative and useful CAD/CAM system that allows dentists to design and mill crowns in their offices during the course of a single patient visit. The merger brings together the highest-tech maker of dental equipment (Sirona) with the largest maker of dental consumables (Dentsply), creating the industry’s largest global supplier. It is our belief that Dentsply Sirona is in a unique position to create and sell new value-added solutions in both equipment and consumables over the years ahead. In addition, we think CEO Jeff Slovin is the right person to drive the combined organization toward a world-class level of performance.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund third quarter 2016 letter to shareholders.  


  • Sequoia Fund 3rd Quarter Update, Says Wells Fargo 'Attractive'

    Dear Clients and Shareholders:


    The third quarter of 2016 was characterized by a return to normalcy after a tumultuous first half. The Sequoia Fund returned 3.56% vs. a 3.85% return for the S&P 500 Index1. At quarter’s end our cash position stood at 10.2%, reflecting the relatively full valuations we find in the marketplace.

      


  • PRIMECAP Adds to Trimble, NN Inc.

    PRIMECAP Management (Trades, Portfolio) added to its positions in Trimble Inc. (NASDAQ:TRMB) and NN Inc. (NASDAQ:NNBR) on Sept. 30.


    PRIMECAP was founded in 1983 by Howard Schow, Mitchell Milias and Theo Kolokotrones in Pasadena, California. The firm manages multiple funds and evaluates securities based on their three- to five-year outlook.

      


  • Gurus Exit Inefficient Packaged Foods Industry

    Throughout the second quarter, gurus trimmed or eliminated their positions in packaged foods companies. Such companies, like Kellogg Co. (NYSE:K) and Leucadia Corp. (NYSE:LUK), have increasing days sales outstanding and contracting profit margins. This leads to decreased value opportunities in the packaged foods industry.


    Which industries inefficiently operate receivables, payables and inventory?

      


  • Ruane Cunniff Cuts Allergan, Berkshire, IBM

    Ruane Cunniff (Trades, Portfolio) is a value investor focused on the intrinsic value of business. It manages a portfolio composed of 118 stocks with a total value of $10.499 billion. During the second quarter the guru traded the following stocks.


    The investor reduced shares in Berkshire Hathaway Inc. Class A (BRK.A) by 19.52% with an impact of -2.78% on the portfolio.

      


  • Francis Chou Adds to 2 Positions in 2nd Quarter

    During the second quarter, Francis Chou (Trades, Portfolio) of Chou Associates Management added 48.11% and 38.77% to its positions in Valeant Pharmaceuticals International Inc. (NYSE:VRX) and Sears Holdings Corp. (NASDAQ:SHLD). As the stock prices continue to decline, the companies offer investing opportunities. The above transactions align with Chou’s strategy of investing in companies with depressed prices.


    Established in 1986, the Chou Associates Fund seeks long-term capital growth by investing in undervalued U.S. and Canadian securities. As mentioned in its recent prospectus, the fund analyzes the company’s balance sheet and common financial metrics: profitability, growth potential and intrinsic value. While the manager has a limited number of positions, Chou reduces the portfolio risk by investing in companies with high margins of safety.

      


  • Ruane Cunniff Comments on Wells Fargo

    Wells Fargo (NYSE:WFC) is the highest return and arguably the best run very large bank in the U.S. It is the number one U.S. bank in many categories including retail deposits; middle market, small business and used car lending; equipment and inventory financing; railcar leasing; and commercial and residential mortgage servicing and originations. It is in fewer volatile business lines than other large banks. It leads the industry in the intensity of its customer relationships with over six products per customer. The number of primary checking accounts at Wells is currently growing at around 5%, an impressive growth rate for a financial institution of this size. Through deposit-driven asset growth and stock buybacks, Wells has done a good job of counteracting shrinking net interest margins over the past decade.


    Wells has a long-tenured management team and its record of technological innovation positions it well to handle both challenges from “fintech” disruptors and customer demands for access through a multitude of distribution channels. Wells has a good record of capital allocation, having added to per-share value during the financial crisis by buying Wachovia, expanding its footprint from its already fast-growing Western base to the equally vibrant Southeast. At the time, Wachovia’s “pick-a-pay” mortgage portfolio concerned many investors, but that portfolio’s quality has turned out to be better than even Wells expected. Recently, Wells acquired a large piece of General Electric’s finance business, an acquisition we think will work out well.

      


  • Ruane Cunniff Comments on Charles Schwab

    Charles Schwab (NYSE:SCHW) pioneered the discount brokerage business in the mid-1970s and has remained an innovator in the investment services industry ever since. It built the well-known OneSource marketplace to provide individual investors access to thousands of no-load mutual funds and was among the first to provide individual investors with an online interface. The success of its investor-friendly strategy is evidenced by a tripling of the company’s client assets from $870 billion in 2000 to more than $2.5 trillion at year-end 2015. This makes Schwab the largest publicly-traded investment services firm in the U.S., ahead of all other discount brokers as well as all the wirehouses. We believe Schwab will continue to attract new brokerage accounts and client assets.


    Specifically, we believe that the trend towards passive investment products and toward automated investment advice represents more opportunity than risk for the company. Traditional wirehouses still hold more than $10 trillion in client assets and likely will be market share donors for years to come. Schwab also holds many billions of dollars in client cash deposits, on which it earns a spread that tends to rise when interest rates rise. Any increase in short-term interest rates would provide significant earnings to Schwab, and thus upside to our investment, though we are not counting on it.

      


  • Ruane Cunniff Comments on Chipotle Mexican Grill

    In the latter half of 2015, a series of pathogen outbreaks at Chipotle Mexican Grill (NYSE:CMG) caused a precipitous drop in traffic at the Mexican-themed restaurant chain. The ensuing negative publicity caused Chipotle’s stock to drop into the low $400 range from a high of $757 per share. Prior to the outbreaks, Chipotle was one of the most successful restaurant concepts of the past thirty years. CEO Steve Ells, a classically trained chef, helped pioneer the concept of high-quality food made from fresh ingredients in a fast casual environment. Chipotle’s high quality product, simple menu, and efficient service combined to make its restaurants extraordinarily profitable, and this in turn has allowed Chipotle to expand its footprint at a rapid pace without resorting to franchising or borrowing money.


    In the wake of the pathogen outbreaks we contacted a number of food safety experts to verify that Chipotle management had established industry leading food safety practices in all of its stores. Wereviewed the history of outbreaks at public and private restaurant chains and tallied the long term impact each outbreak had on each chain’s franchise value. Most importantly, we held conversations with dozens of industry veterans to develop a timeline for Chipotle’s recovery. While we expect Chipotle to suffer through a slow and bumpy recovery, we believe the company has an opportunity to more than double its U.S. store base over time at terrific unit economics.

      


  • Ruane Cunniff Comments on Carmax

    Carmax (NYSE:KMX) has turned the once-notorious used car business on its head with no-haggle pricing on products that have been rigorously reconditioned and certified. The biggest used car dealer in the country and the only one with a national brand, Carmax has the opportunity to roughly double its store count while increasing same-store sales in the years ahead. We have followed Carmax for more than a decade and we particularly like the fact that others have tried to copy its business model without success. The shares were weak during the quarter due to concerns that a slowing auto cycle could depress used car prices, as well as the emergence of some new competitors on the internet. However, we think Carmax has a terrific opportunity to capitalize on Internet selling. We bought Carmax shares at a reasonable 15x P/E multiple because we believe whatever the short-term fluctuations in used car pricing, the company’s consumer appeal is quite strong.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund second quarter 2016 shareholder letter.  


  • Ruane Cunniff Comments on Cabela’s

    We also sold our shares in Cabela’s (NYSE:CAB), the camping and hunting retailer. Cabela’s board of directors is exploring a sale of the business, which has lifted its share price recently. We chose to exit as deal rumors swirled, believing that Cabela’s shares hold little appeal if a deal does not happen. This is a management team that has struggled with the basics of retailing: the stores are expensive to build and operate and the merchandise, while compelling, is not competitively priced.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund second quarter 2016 shareholder letter.  


  • Ruane Cunniff Comments on Allergan

    We exited two smaller positions during the quarter. While Allergan (NYSE:AGN) has a stronger collection of assets and far better outlook than Valeant, we suspect many drug makers will face increasing pressure from health care payers who need to reduce the relentless double-digit inflation rate for branded pharmaceuticals.

    From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund second quarter 2016 shareholder letter.  


  • Ruane Cunniff Comments on Idexx Laboratories

    We made the difficult decision during the quarter to part with our longtime holding in Idexx Laboratories (NASDAQ:IDXX). Idexx had been a wonderful stock for us over the past 13 years, compounding at better than a 17% rate from the time of our original purchases in 2003 through June 30. This compares to a 7.4% compound for the S&P 500 Index over the same period. Idexx has a terrific market position in veterinary diagnostics and a very capable CEO in Jon Ayers. But the market fully realizes Idexx’s strengths. It is according Idexx a price-to- earnings ratio of more than 40x the 2016 consensus earnings per share estimate of $ 2.21. The company has grown earnings per share at an 11% rate for the past five years and should grow a bit below that rate in 2016. The market helped with our decision as the price of Idexx shares rose sharply during the quarter. We owe a huge debt of gratitude to Jon Ayers. He is a hero to Sequoia shareholders and greatly respected by all of us.

      


  • Sequoia Fund Addresses Valeant, New Buys, Board Changes in 2nd Quarter Letter

    Dear Clients and Sequoia Shareholders:

      


  • Ruane Cunniff Acquires Shares of Dentsply Sirona

    Ruane Cunniff (Trades, Portfolio) bought a 4,843,324-share stake in Dentsply Sirona Inc. (NASDAQ:XRAY) during the first quarter.


    Dentsply Sirona, a Delaware corporation that was founded in 1899, is a leading designer, developer, manufacturer and marketer of a broad range of consumable dental products for the professional dental market. The company also manufactures and markets other consumable medical device products. The company’s principal product categories are dental consumable products, dental laboratory products, dental specialty products and consumable medical device products. The company’s worldwide headquarters and executive offices are located in York, Pennsylvania.

      


  • Ruane Cunniff's Sequoia Fund Reduces Stake in Valeant

    Several days after appointing an investment committee and new holding restrictions in response to substantial losses on Valeant Pharmaceuticals (NYSE:VRX), the Sequoia Fund sold a substantial portion of its investment in the company.


    The filing from a week ago and made public Tuesday afternoon documented a 47% reduction in the Sequoia Fund’s Valeant position, to 16.1 million shares from 30.3 million shares. It also shrank the fund’s ownership of the company to 4.7% from 8.8%.

      


  • Stocks Fall to 5-Year Lows

    According to GuruFocus' list, these guru stocks have reached their five-year lows: Bed Bath & Beyond Inc. (NASDAQ:BBBY), Nordstrom Inc. (NYSE:JWN), Fossil Group Inc. (NASDAQ:FOSL) and DeVry Education Group Inc. (NYSE:DV).


    Bed Bath & Beyond reaches $45.57

      


  • Ruane Cunniff Buys JD.Com, Yelp, LinkedIn

    Ruane Cunniff (Trades, Portfolio) is a value investor focused on the intrinsic value of a business. The firm is a long-term investor and will buy stocks and hold them for quite awhile, even if sometimes the stocks seem to be overvalued. During the first quarter the investor bought shares in the following stocks.


    The guru acquired 4,843,324 shares in Dentsply Sirona Inc. (XRAY) with an impact of 2.32% on the portfolio.

      


  • Ruane Cunniff Sells Shares of Goldman Sachs, IBM

    Ruane, Cunniff & Goldfarb Inc. was founded by William Ruane, who died in October 2005. GuruFocus continues to track the firm's stock picks. During the fourth quarter, the firm sold many stocks including the following.


    Ruane Cunniff decreased its stake in Goldman Sachs Group Inc. (GS) by 39.13%, and the deal had an impact of -0.44% on the portfolio.

      


  • Ruane Cunniff Boosts Time Warner During 4th Quarter

    Ruane Cunniff (Trades, Portfolio) is a value investor focused on the intrinsic value of business. It is a long-term investor and will buy a stock and hold it for a long time, even if sometimes the stocks seem to be overvalued. Its largest buys during the fourth quarter were:


    The investor increased its stake in Precision Castparts Corp. (PCP) by 33.93%, and the deal had an impact of 1.59% on the portfolio.

      


  • Bob Goldfarb Steps Down at Sequoia Fund

    There are three gurus who are suffering tremendously through big concentrated bets on Valeant (NYSE:VRX) that backfired starting at the end of last year.


    The Sequoia Fund is taking perhaps the worst of it. With a 30%-plus position, it had two directors resign over the concentrated bet last year. In response, instead of cutting back, Sequoia upped its stake while the share price was falling due to the controversy surrounding the Philidor pharmacy.

      


  • Sequoia CEO and Portfolio Manager Resigns Amid Valeant Losses

    Saying it will take a more collaborative approach to portfolio management, Ruane Cuniff announced Wednesday the resignation of CEO and Co-Manager Bob Goldfarb, who led the fund to 14% annual returns and had a 45-year investing career before the losses from its outsized position troubled pharmaceutical company Valeant (NYSE:VRX).


    Read the full contents of the letter below:

      


  • Ackman Named to Valeant Board as Search for New CEO Begins

    Valeant Pharmaceuticals (NYSE:VRX) announced today that it will replace CEO Michael Pearson and name major shareholder Bill Ackman (Trades, Portfolio) to the board of directors. Pearson will continue to serve as CEO until a successor is named, and Katharine Stevenson will resign from the board to make room for Ackman.

    The company also said that CFO Howard Schiller has been asked to resign from the board due to improper conduct that resulted in incorrect information, but he has not yet done so. Valeant is already in the process of revising its numbers for fiscal 2014, and plans to include them with the 2015 report that will be filed with the SEC and Canadian Securities Regulators by April 29. Just last week, Valeant said the delayed filing would put the company at risk for defaulting on some of its debt.  


  • Morningstar Reviews Sequoia Fund Rating Due to Valeant Losses

    A fund that once boasted one of the best long-term track records and a friendly relationship with Warren Buffett (Trades, Portfolio) found itself maimed by a series of negative developments at its top holding, Valeant Pharmaceuticals (NYSE:VRX) in recent months. The stock’s months-long plunge and Sequoia’s large exposure prompted mutual funds rating company Morningstar to place its analyst rating under review Wednesday. It also caused Sequoia’s manager to say their “credibility as investors has been damaged by this saga,” but few saw the sinkhole coming.


    One of Morningstar’s primary arguments for the review of Sequoia was its portfolio’s sizable concentration in Valeant, charging managers with taking no steps to “mitigate the risks of such a large position.” Yet Sequoia had skirted traditional mutual fund diversification in the past to good result. Buffett’s company, Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), ballooned to 35% of the fund in the 1990s, the New York Times reported, its only position to exceed Valeant in size.

      


  • Pershing Square Gains Board Seat on Valeant

    Activist investor Bill Ackman (Trades, Portfolio) of Pershing Square has landed a representative on the board of Valeant Pharmaceuticals (NYSE:VRX), the controversy-ridden company whose stock has tanked over the past year, possibly giving investors hope that Pershing can orchestrate a turnaround.


    Valeant announced Wednesday that Pershing Vice Chairman Stephen Fraidin will join Valeant’s board of directors, which expanded from 12 to 14 seats, along with Fred Eshelman, who founded Furiex Pharmaceuticals (FURX), and Thomas Ross, president emeritus of the University of North Carolina.

      


  • Chase Coleman Sells Autohome, IBM in 4th Quarter

    Chase Coleman (Trades, Portfolio) is the founder of Tiger Global Management. During the fourth quarter he sold many stocks.


    He reduced his stake in Autohome Inc. (ATHM) by 42.76%. The deal had an impact of -1.5% on the portfolio.

      


  • Sequoia Fund Comments on Rolls-Royce

    Our European holdings continued to turn in poor performance. Rolls-Royce (LSE:RR.) fired its CEO John Rishton and replaced him with a board member, Warren East, who had great success leading the semiconductor company ARM Holdings. Mr. East knows what he is doing but he’s got his work cut out for him as he tries to improve operating discipline at this inefficient manufacturer. Rolls and our UK holding IMI plc were the two worst-performing stocks in Sequoia, each declining about 35% in dollars.


    From Sequoia Fund's 4th quarter 2015 shareholder letter.

      


  • Sequoia Fund Comments on Berkshire Hathaway

    Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), our second largest holding, declined by 12.5% during the year. Berkshire now trades at less than 12 times our estimate of 2016 earnings. We think Berkshire grew its earnings at a high-single digit rate in 2015 but many of its individual operating companies face challenges. Railroad volumes declined abruptly at year-end and the outlook for 2016 volume is poor. GEICO’s auto insurance profit was off and many of Berkshire’s other service and manufacturing businesses were soft. Berkshire committed over $40 billion to acquisitions in 2015, the bulk of it to buy Precision Castparts.


    From Sequoia Fund's 4th quarter 2015 shareholder letter.

      


  • Sequoia Fund Comments on Valeant Pharmaceuticals

    Sequoia turned in its second straight year of poor results in 2015.Teasing out the source of our underperformance doesn’t take much work. We began the year with a 20% weighting in Valeant Pharmaceuticals (NYSE:VRX). Valeant rose by more than 80% through the summer, driving very strong gains for the Fund. But the price collapsed in the fall amid revelations and allegations about the company’s business practices. Ultimately, Valeant declined 29% for the year and by more than 70% from its 52-week high to its low. We bought more shares in October, and we calculate that Valeant contributed -6.3% to Sequoia’s return of -7.3% for the year.


    At its peak price,Valeant constituted more than 30% of the Fund’s assets. We’ve been criticized for allowing the holding to grow so large, but our feeling before the crisis erupted was that Valeant was executing well on its business model. Earnings were growing rapidly and we believed the company was making intelligent acquisitions that were creating shareholder value.Valeant was taking outsized price increases on a portion of its drug portfolio, but the entire branded pharmaceutical industry routinely has taken substantial annual price increases on drugs for more than a decade.

      


  • Sequoia Fund Releases 4th Quarter Shareholder Letter

    Dear Shareholder:


    Sequoia Fund’s results for the quarter and year ended December 31, 2015 appear below with comparable results for the S&P 500 Index:

      


  • Ruane Cunniff Adds to Valeant Stake, Buys 3 New Stocks

    When controversy erupted over Valeant Pharmaceuticals’ accounting practices last quarter, advisers and investors parted ways over the stock. The Sequoia Fund in particular both suffered large losses due to its outsized position in the company and defended its questioned relationship with a pharmacy, Philidor, and astronomical drug price increases. Last week, Ruane Cunniff, the distributor of the Sequoia Fund, reported that it added more share of Valeant and bought three new stocks during the fourth quarter.


    Ruane Cunniff ended the year with 142 positions in its portfolio, valued at $17.6 billion. It has as its top sector health care, which represents 54% of all holdings, followed by financial services at 22% of holdings. The Sequoia Fund in its mid-year letter described its portfolio as containing “market-leading companies that earn high returns on capital, boast strong balance sheets and self-fund their growth.”

      


  • O'Reilly and ConAgra Foods Are Outperforming the Market

    The following are some of the stocks that outperformed the S&P 500 Index over the last 12 months and have been bought by gurus during the last quarter.


    O'Reilly Automotive Inc. (ORLY) has a market cap of $25.23 billion, and during the last 12 months has outperformed the S&P 500 Index by 32.2%. Currently five gurus are holding the company that has returned 4% year-to-date and 363% during the last five years. It is now trading with a P/E ratio of 29.22 and according to the DCF calculator it looks undervalued with a margin of safety of 2%.

      


  • 5 Stocks Reach 5-Year Lows

    According to GuruFocus list of five-year lows, these guru stocks have reached their five-year lows: Iron Mountain Inc. (NYSE:IRM), FMC Corp. (NYSE:FMC), Liberty Property Trust (NYSE:LPT), Range Resources Corp. (NYSE:RRC), BOK Financial Corp. (NASDAQ:BOKF).


    Iron Mountain Inc. reached $24.84

      


  • Ruane Cunniff's Top New Buys of 3rd Quarter

    Ruane Cunniff was founded by William Ruane. The Fund’s investment objective is long-term growth of capital. In pursuing this objective the Fund focuses on investing in equity securities that it believes are undervalued at the time of purchase and have the potential for growth.


    In total, the portfolio has a value of $19.485 billion and is composed of 149 stocks; nine stocks got new positions in the portfolio in the third quarter.

      


  • Ruane Cunniff's Best Value Holdings

    Ruane Cunniff (Trades, Portfolio) is a value investment fund focused on the intrinsic value of businesses. The company was founded by William Ruane, who died in 2005, and was recognized by Warren Buffett (Trades, Portfolio) as a “superinvestor.” The firm continues his legacy by finding businesses that meet their stringent qualities of high-quality, which should allow investor capital to compound over the long-term. The company has extremely low turnover and will own businesses for a very long period of time, even if the stock appears to be overvalued. The fund has come under flack of late because of its massive position in Valeant (VRX).


    Here are three companies from Ruane Cunniff (Trades, Portfolio)’s portfolio that we find interesting at current levels:

      


  • Zeke Ashton Sells Greenlight Capital and Vector Group, Buys Parker and Alphabet

    Zeke Ashton (Trades, Portfolio) is the managing partner of Centaur Capital Partners and manages the investments for the Centaur Value Fund.


    He manages a portfolio composed of 32 stocks with total value of $64 million and the following are his most weighted trades during the third quarter.

      


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