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James Li
James Li
Articles (1535) 

Ruane Cunniff's Top 4 Trades in the 4th Quarter

Firm recognized by Buffett releases quarterly portfolio

Ruane Cunniff (Trades, Portfolio), the firm founded by the late William Ruane, disclosed last week that its top four trades during the fourth quarter of 2020 included a new position in Netflix Inc. (NASDAQ:NFLX), a boost in its Credit Acceptance Corp. (NASDAQ:CACC) holding and reductions in Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG) and Wayfair Inc. (NYSE:W).

The New York-based firm, which received recognition from Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio), manages the Sequoia Fund in addition to other separate managed accounts. The fund managers apply a long-term, value-oriented strategy in which emphasis is placed on a company's balance sheet, earnings history and growth prospects.

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As of December 2020, the firm's $9.38 billion equity portfolio contains 38 stocks, with four new holdings and a turnover ratio of 5%. The top three sectors in terms of weight are communication services, financial services and technology, representing 34.07%, 26.60% and 16.71% of the equity portfolio.

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Netflix

The firm purchased 701,374 shares of Netflix (NASDAQ:NFLX), dedicating 4.04% of its equity portfolio to the position. Shares averaged $506.65 during the fourth quarter; the stock is fairly valued based on Thursday's price-to-GF Value ratio of 0.97.

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GuruFocus ranks the Los Gatos, California-based streaming giant's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that is near a 10-year high of 18.34% and outperforming over 86.55% of global competitors.

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Gurus with large holdings in Netflix include Ken Fisher (Trades, Portfolio)'s Fisher Investments, Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund and Steve Mandel (Trades, Portfolio)'s Lone Pine Capital.

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Credit Acceptance

The firm added 311,243 shares of Credit Acceptance (NASDAQ:CACC), increasing the position 24.1% and the equity portfolio 1.15%. Shares averaged $346.14 during the fourth quarter.

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GuruFocus ranks the Southfield, Michigan-based consumer finance company's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and returns that are outperforming over 88% of global competitors.

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Alphabet

The firm sold 239,640 Class C shares of Alphabet (NASDAQ:GOOG), cutting the position 52.31% and the equity portfolio 4.19%. Shares averaged $1,690.43 during the fourth quarter.

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GuruFocus ranks the Mountain View, California-based online search giant's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins outperforming over 80% of global competitors.

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Wayfair

The firm sold 542,605 shares of Wayfair (NYSE:W), trimming the position 23.23% and the equity portfolio 1.88%. Shares averaged $225.81 during the fourth quarter.

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GuruFocus ranks the Boston-based e-commerce company's profitability 3 out of 10 on the back of profit margins and returns underperforming over 60% of global competitors.

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Disclosure: No positions.

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