Ruane Cunniff (Trades, Portfolio), which Buffett catapulted to fame when he recommended it to clients, disclosed some of its second-quarter portfolio activity in a letter Thursday that included trimming its Berkshire Hathaway position. The Securities and Exchange Commission does not require firms to announce their portfolios until 45 days after the end of the quarter.
Ruane Cunniff (Trades, Portfolio), which manages the Sequoia Fund, said that managers reduced stakes in Amazon (AMZN, Financial) and Berkshire Hathaway (BRK.A, Financial) and exited Omnicom Group (OMC, Financial). On the buy side, they added to holdings in Facebook (FB, Financial), Jacobs Engineering (JEC, Financial), Liberty Broadband (LBRDA, Financial) and Naspers (JSE:NPN, Financial).
At its investor day conference in May, portfolio manager Chase Sheridan discussed its internet holdings:
“Now it is important to note, we did not set out two years ago with a determination to increase our internet exposure. We simply followed our long standing investment process wherever it led us. We came upon these opportunities at at a time, with each idea sourced and vetted by a different analyst. It just so happens that in our judgment, the internet sector offers some of the most compelling investment opportunities in today’s environment. These companies share many of the characteristics of the classic Sequoia Fund investment. Each one of them is the best in the world at what they do. Each one has a dominant and growing share of its market. All but Booking are still controlled by young, brilliant founders who are likely to remain in place for a long time and who remain among the largest shareholders of their businesses, which helps to align their interests with ours. All of the companies have good cash flow characteristics and massive competitive advantages which we expect to persiste for many years.”Â
The Sequoia Fund also beat the index with a 5.8% return net of fees, compared to a 3.43% gain in the S&P 500. Year to date, it is up 7.16%, besting the 2.65% rise in the index. It holds to a value-investing philosophy with a long-term mindset.
At 8.88% of the portfolio, Amazon ranked as Ruane Cunniff (Trades, Portfolio)’s second-largest position. The firm held 676,409 shares of the company at the end of the first quarter. Its gain is around 75% with the stock’s rise grazing 45% gain year to date.
A-shares of Berkshire Hathaway were the firm’s biggest holding at 9.12% of the portfolio. It held 3,372 shares of the $283,440 stock at the end of the first quarter. Berkshire class-A shares have declined 5.24% year to date.
Ruane Cunniff also commented on Berkshire at its investor day:
“We have trimmed our exposure also over the past two years in Berkshire Hathaway and TJ Maxx, two terrific businesses and very long-term holdings in Sequoia Fund. We continue to hold tehse two businesses but we feel better about holding them in the current sizes.”
Ruane Cunniff (Trades, Portfolio) axed 1,972,830 shares of Omnicom, a long-term holding that predates the first quarter of 2015. The advertising and marketing company’s stock rose nearly 5% year to date, hovering around $75.86 Thursday.
Facebook was a top-20 holding at 3.09% of the portfolio. Ruane Cunniff (Trades, Portfolio) owned 2,182,298 shares of the social media company at the end of the first quarter. It started the position in the fourth quarter of 2016, and the stock’s average price rose roughly 15% year to date.
Ruane Cunniff (Trades, Portfolio) was founded in 1969 and its flagship Sequoia Fund has a 13.66% annualized return, which outperformed the 10.94% return in the S&P 500 index. As of the end of the first quarter, its top holdings were: Alphabet (GOOGL), Berkshire Hathaway (BRK.A, Financial), CarMax (KMX), MasterCard (MA) and Constellation Software (CSU).
