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Sequoia Fund is Still Rather Concentrated; Top Holdings: BRK.A, VRX, TJX, IDXX, FAST, MHK

November 30, 2010 | About:
guruek

guruek

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The Sequoia Fund was founded in 1970 by William Ruane, who died in Oct. 2005. Currently, the Fund ‘s investment committee consists of Richard T. Cunniff, Robert Goldfarb, and David Poppe.

William Ruane was a Graham-and-Doddsville superinvestor recognized by Warren Buffett. He is a student of Benjamin Graham, and attended his class during the same time as Warren Buffett did. $10,000 invested in the fund in 1970 at inception would become $1,922,460 through June 30, 2010, dividend and distribution re-invested. Talk about fortune making!

Morningstar has recently an article on the fund entitled Sequoia Dials Down Its Concentration. The articles outlined the gradual reduction of the fund holding of Buffett’s company Berkshire Hathaway (BRK.A) over the past five years. The fund owned as much as 35% of its asset in this one stock and currently held low teens. Here are the reasons given by the new managers of the fund:
Today, managers Bob Goldfarb and David Poppe still like Berkshire. Many of the attributes they seek in a long-term investment, such as a rock-solid balance sheet and an ability to compound capital, remain intact, and they said in their 2009 annual report that they expect double-digit annual earnings growth in 2010 and 2011. But there are several reasons for trimming the stock. Goldfarb says he can find cheaper stocks. In addition, it's unlikely Buffett's successor will be as good as he is. Finally, Goldfarb says they want a flatter, more diversified portfolio.


The article also touched the other holdings of the fun to illustrate the fact that the fund is spreading out and becoming less concentrated:
Goldfarb and Poppe have further diversified the fund by increasing the number of stocks in the portfolio. As of the end of June 2010, Sequoia owned 36 stocks. That's double what the fund held 10 years ago. Further, whereas more than 80% of assets were parked in the fund's top 10 stocks early in the 2000s, roughly half the fund's assets rest in its 10 largest holdings today.


It is an interesting article. You should check it out if you own the fund or are thinking about owning the fund. One thing I do think it can improve is to use the newer data.

The top holdings based on the September 30, 2010 portfolio are:

No. 1: Berkshire Hathaway Inc. (BRK.A), Weightings: 14.04% - 9,972 Shares

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $197.97 billion; its shares were traded at around $120200 with a P/E ratio of 22.9 and P/S ratio of 2.2. Berkshire Hathaway Inc. had an annual average earning growth of 3.7% over the past 10 years.



No. 2: Valeant Pharmaceuticals International (VRX), Weightings: 9.64% - 34,024,824 Shares

Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. Valeant Pharmaceuticals International has a market cap of $7.76 billion; its shares were traded at around $25.87 with a P/E ratio of 22.3 and P/S ratio of 9.5. The dividend yield of Valeant Pharmaceuticals International stocks is 1.5%. Valeant Pharmaceuticals International had an annual average earning growth of 13.7% over the past 5 years.



No. 3: The TJX Companies Inc. (TJX), Weightings: 8.61% - 17,067,614 Shares

TJX Companies, Inc. is an off-price retailer of apparel and home fashions in the U. The Tjx Companies Inc. has a market cap of $18.27 billion; its shares were traded at around $45.61 with a P/E ratio of 13.5 and P/S ratio of 0.9. The dividend yield of The Tjx Companies Inc. stocks is 1.3%. The Tjx Companies Inc. had an annual average earning growth of 11.5% over the past 10 years. GuruFocus rated The Tjx Companies Inc. the business predictability rank of 4.5-star.



No. 4: IDEXX Laboratories Inc. (IDXX), Weightings: 7.59% - 10,875,140 Shares

IDEXX Laboratories, Inc. is a world leader in providing diagnostic, detection, and information products to the animal health industry as well as quality assurance products and services to the food and water industries. Idexx Laboratories Inc. has a market cap of $3.71 billion; its shares were traded at around $64.21 with a P/E ratio of 28.4 and P/S ratio of 3.6. Idexx Laboratories Inc. had an annual average earning growth of 17.5% over the past 10 years. GuruFocus rated Idexx Laboratories Inc. the business predictability rank of 4.5-star.



No. 5: Fastenal Company (FAST), Weightings: 6.92% - 11,500,282 Shares

Fastenal Company sells industrial and construction supplies grouped into eleven product lines. Fastenal Company has a market cap of $7.89 billion; its shares were traded at around $53.52 with a P/E ratio of 32.2 and P/S ratio of 4.1. The dividend yield of Fastenal Company stocks is 1.6%. Fastenal Company had an annual average earning growth of 17.4% over the past 10 years. GuruFocus rated Fastenal Company the business predictability rank of 5-star.



No. 6: Mohawk Industries Inc. (MHK), Weightings: 5.14% - 8,527,443 Shares

Mohawk Industries, Inc. is one of the producers of woven and tufted broadloom carpet and rugs for principally residential applications. Mohawk Industries Inc. has a market cap of $3.6 billion; its shares were traded at around $52.54 with a P/E ratio of 21.8 and P/S ratio of 0.7.



Check out the complete stock portfolio by clicking on Ruane Cunniff.


Rating: 2.3/5 (3 votes)

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