William Ruane and Rick Cunniff founded Ruane Cunniff in 1970 and created their Sequoia Fund (SEQUX). Ruane was a colleague of Warren Buffet and had been influenced by Professor Benjamin Graham. William Ruane died in Oct. 2005, but we continue to track its stock picks. The current investment committee is directed by Richard T. Cunniff. Since inception in 1970 through September 30, 2007, the Fund has returned 15.57% average annually. During the same period the S&P 500 returned an average 11.86% annually.
Ruane & Cunniff are value investors focused on the intrinsic value of business. They are long-term investors, and will buy a stock and hold it for a long time, even if sometimes the stocks seem to be overvalued. They look at common stocks as units of ownership in a business, and purchase them when the price appears low in relation to the value of the total enterprise. The Firm shuns technical stock market studies, and looks at the balance sheet, earnings history, and prospects of each investment when determining its value.
Six out of ten years, Sequoia fund did better than S&P500 with a ten-year average gain of 2.4%. The fund manager David Poppe admits “I think we can be pretty humble and say, Hmmm, not sure we're going to generate spectacular returns, but we ought to do better than the last ten years.”
On July 1970, if we chose to invest $10,000 into either Sequoia Fund or $10,000 into S&P500, and keep our virtuous long-term patience & discipline for 38 years, our Sequoia Fund investment would be worth $1,836,645 compared to our S&P500 market value of $471,259 (Investment Comparison from 1970 to 2008).
2009 Semi-Annual Report (p 5): Some of Sequoia Fund’s main assets are 20% in diversified company Berkshire Hathaway, 20% in U.S. Government Obligations like T-bills, and 12% in Retail like TJMaxx, Walgreens, Target, Walmart, and Costco. Read our article on ]Ruane Cunniff’s New Purchases and Sells.
For more detailed discussion on Sequoia’s Top Holdings read our article.
In the annual Ruane, Cunniff & Goldfarb Investor Day Meeting (May 2009), Bob Goldfarb said quarry companies like Martin Marietta and Vulcan are the “strongest in terms of pricing power” to protect earnings from inflation (p 6). Goldfarb was also credited with the comment that government debt and temporary stimulus injection have made the recession less severe, but “at the expense of lengthening it.” [i][/i]
Ruane Cunniff owns 938,451 shares as of September, which accounts for 0.5% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Last week, Exxon Mobile (XOM) made a $41 billion deal to buy XTO. The deal includes $352 million in stocks paid to CEO Bob Simpson.
Ruane Cunniff owns 325,927 shares as of September, which accounts for 0.1% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Penn Virginia reports 3Q 6% increase in production to 12.4 billion cubic feet of natural gas equivalent per day, compared to 11.7 billion cubic feet during in 3Q of 2008. The company expects $87.9 million capital expense charge in the 3Q reports.
Ruane Cunniff owns 200,000 shares as of September, which accounts for 0.05% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. The petroleum operator lost $24.5 million or $1.44 per diluted share for the third quarter, compared to earnings of $126.9 million or $8.55 per diluted share in 3Q of 2008.
Ruane Cunniff owns 106,585 shares as of September, which accounts for 0.02% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. The tobacco company declares $0.34 dividend for the last quarter of 2009. Phillip Morris is based in Switzerland, and was owned by Altria Group Inc until the 2008 spin-off. In the 3Q, Altria spent $2.7 million on lobbying for tobacco and healthcare legislation. The company has filed suit against 27 retailers in New York & New Jersey for selling counterfeit Malboro branded tobacco products.
Ruane Cunniff owns 35,987 shares as of September, which accounts for 0.03% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Shell’s 3Q profits are down 62% to $3.2 billion or $0.53 per share. Revenue dropped to $75.0 billion from $131.6 billion. The company plans to build a floating LNG processing plant near coast of Western Australia. This technology allows for more cost-effective transport. Once operational, the facility will process 3.5 million tons of LNG annually.
Sources:
http://www.sequoiafund.com/fund-reports.htm
http://www.sequoiafund.com/fp-investment-comparison.htm
Ruane & Cunniff are value investors focused on the intrinsic value of business. They are long-term investors, and will buy a stock and hold it for a long time, even if sometimes the stocks seem to be overvalued. They look at common stocks as units of ownership in a business, and purchase them when the price appears low in relation to the value of the total enterprise. The Firm shuns technical stock market studies, and looks at the balance sheet, earnings history, and prospects of each investment when determining its value.
Six out of ten years, Sequoia fund did better than S&P500 with a ten-year average gain of 2.4%. The fund manager David Poppe admits “I think we can be pretty humble and say, Hmmm, not sure we're going to generate spectacular returns, but we ought to do better than the last ten years.”
| Return Table | Sequoia Fund | S&P500 | Excess Gain |
| 1999 | -16.54% | 21.04% | -37.58% |
| 2000 | 20.06% | -9.10% | 29.16% |
| 2001 | 10.52% | -11.89% | 22.41% |
| 2002 | -2.64% | -22.10% | 19.46% |
| 2003 | 17.12% | 28.69% | -11.57% |
| 2004 | 4.66% | 10.88% | -6.22% |
| 2005 | 7.78% | 4.91% | 2.87% |
| 2006 | 8.34% | 15.80% | -7.46% |
| 2007 | 8.40% | 5.49% | 2.91% |
| 2008 | -27.03% | -37.00% | 9.97% |
| 10-Year-Average | 3.07% | 0.67% | 2.40% |
On July 1970, if we chose to invest $10,000 into either Sequoia Fund or $10,000 into S&P500, and keep our virtuous long-term patience & discipline for 38 years, our Sequoia Fund investment would be worth $1,836,645 compared to our S&P500 market value of $471,259 (Investment Comparison from 1970 to 2008).
2009 Semi-Annual Report (p 5): Some of Sequoia Fund’s main assets are 20% in diversified company Berkshire Hathaway, 20% in U.S. Government Obligations like T-bills, and 12% in Retail like TJMaxx, Walgreens, Target, Walmart, and Costco. Read our article on ]Ruane Cunniff’s New Purchases and Sells.
For more detailed discussion on Sequoia’s Top Holdings read our article.
| Top Companies | Current Weightings (%) | Changes since Dec 2008 |
| Berkshire Hathaway | 20.8 | Trim |
| Idexx Lab | 6.6 | Add |
| TJX Companies | 6.1 | Add |
| Martin Marietta Materials | 5.4 | Trim |
| Porsche | 4.6 | Trim |
| Fastenal Company | 4.5 | Trim |
| Mohawk Industries | 3.7 | Trim |
In the annual Ruane, Cunniff & Goldfarb Investor Day Meeting (May 2009), Bob Goldfarb said quarry companies like Martin Marietta and Vulcan are the “strongest in terms of pricing power” to protect earnings from inflation (p 6). Goldfarb was also credited with the comment that government debt and temporary stimulus injection have made the recession less severe, but “at the expense of lengthening it.” [i][/i]
High Growth Ruane Cunniff Stocks
XTO Energy Inc. (XTO, Financial)
XTO Energy Inc. has a market cap of $27.09 billion; its shares were traded at around $46.68 with a P/E ratio of 14.02 and P/S ratio of 3.52. The dividend yield of Xto Energy Inc. stocks is 1.07%. XTO Energy Inc. had an annual average earning growth of 36.6% over the past 10 years.Ruane Cunniff owns 938,451 shares as of September, which accounts for 0.5% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Last week, Exxon Mobile (XOM) made a $41 billion deal to buy XTO. The deal includes $352 million in stocks paid to CEO Bob Simpson.
Penn Virginia Corp. (PVA, Financial)
Oil and gas company, Penn Virginia Corporation has a market cap of $959.89 million; its shares were traded at around $21.15 with and P/S ratio of 0.79. The dividend yield of Penn Virginia Corp. stocks is 1.06%. Penn Virginia Corp. had an annual average earning growth of 32.3% over the past 10 years.Ruane Cunniff owns 325,927 shares as of September, which accounts for 0.1% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Penn Virginia reports 3Q 6% increase in production to 12.4 billion cubic feet of natural gas equivalent per day, compared to 11.7 billion cubic feet during in 3Q of 2008. The company expects $87.9 million capital expense charge in the 3Q reports.
Petroleum Development Corp. (PETD, Financial)
Petroleum Development Corporation has a market cap of $353.36 million; its shares were traded at around $18.38 with a P/E ratio of 28.72 and P/S ratio of 0.58. Petroleum Development Corp. had an annual average earning growth of 27.4% over the past 10 years.Ruane Cunniff owns 200,000 shares as of September, which accounts for 0.05% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. The petroleum operator lost $24.5 million or $1.44 per diluted share for the third quarter, compared to earnings of $126.9 million or $8.55 per diluted share in 3Q of 2008.
High Yield Ruane Cunniff Stocks
Altria Group Inc. (MO, Financial)
Altria Group is the parent company of Philip Morris USA, U.S. Smokeless Tobacco Company, John Middleton, Ste. Michelle Wine Estates and Philip Morris Capital Corporation. Their tobacco company brand portfolios consist of successful and well-known brand names such as Marlboro, Copenhagen, Skoal and Black & Mild. Altria Group Inc. has a market cap of $40.72 billion; its shares were traded at around $19.65 with a P/E ratio of 11.29 and P/S ratio of 2.1. The dividend yield of Altria Group Inc. stocks is 6.92%. Altria Group Inc. had an annual average earning growth of 3.4% over the past 10 years.Ruane Cunniff owns 106,585 shares as of September, which accounts for 0.02% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. The tobacco company declares $0.34 dividend for the last quarter of 2009. Phillip Morris is based in Switzerland, and was owned by Altria Group Inc until the 2008 spin-off. In the 3Q, Altria spent $2.7 million on lobbying for tobacco and healthcare legislation. The company has filed suit against 27 retailers in New York & New Jersey for selling counterfeit Malboro branded tobacco products.
Royal Dutch Shell PLC (RDS-A)
Royal Dutch Petroleum Company owns 60% of the Royal Dutch/Shell Group of companies. These companies are involved in all phases of the petroleum industry from exploration to final processing and delivery. Royal Dutch Petroleum Company has not operations of its own, and virtually the whole of its income is derived from its 60% interest. Royal Dutch Shell Plc has a market cap of $178.08 billion; its shares were traded at around $58.07 with a P/E ratio of 12.46 and P/S ratio of 0.39. The dividend yield of Royal Dutch Shell Plc stocks is 4.92%. Royal Dutch Shell Plc had an annual average earning growth of 14.6% over the past 10 years.Ruane Cunniff owns 35,987 shares as of September, which accounts for 0.03% of the $7.71 billion portfolio of Ruane & Cunniff & Goldfarb Inc. Shell’s 3Q profits are down 62% to $3.2 billion or $0.53 per share. Revenue dropped to $75.0 billion from $131.6 billion. The company plans to build a floating LNG processing plant near coast of Western Australia. This technology allows for more cost-effective transport. Once operational, the facility will process 3.5 million tons of LNG annually.
Sources:
http://www.sequoiafund.com/fund-reports.htm
http://www.sequoiafund.com/fp-investment-comparison.htm
