Ruane Cunniff

Ruane Cunniff

Last Update: 06-07-2016

Number of Stocks: 133
Number of New Stocks: 11

Total Value: $12,872 Mil
Q/Q Turnover: 3%

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

Ruane Cunniff Watch

  • 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%.


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