Every quarter, many money managers have to disclose what they've bought and sold, through "13-F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Ruane, Cunniff, & Goldfarb, founded by the late William Ruane, a student of value-investing giant Benjamin Graham, along with Warren Buffett. Ruane founded the Sequoia (SEQUX) mutual fund in 1970, and its performance will show you why you might want to pay attention to the fund company's investments: Since inception and through the end of March 2012, the fund gained a cumulative 26,216%, versus 6,328% for the S&P 500. Annualized, that's 14.2% vs. 10.4%. Over the past decade, which has been a challenging one for the stock market, Sequoia averaged 6.3% annually, versus 5.3% for the S&P 500.
Ruane, Cunniff, & Goldfarb's overall reportable portfolio (which may contain holdings other than those of the flagship Sequoia fund) totaled $12.3 billion in value as of June 30. The company's top three holdings, representing about 25% of its total asset value, were Valeant Pharmaceuticals International, TJX, and Berkshire Hathaway.
So what does Ruane, Cunniff, & Goldfarb's latest quarterly 13-F filing tell us? Here are a few interesting details.
New holdings include IT consulting and outsourcing specialist Cognizant Technology Solutions (Nasdaq: CTSH ) . The company's growth has slowed a bit in recent years, but it recently reported solid revenue and earnings increases. Cognizant (and its peers) are expecting slowing demand because of global economic malaise. Still, it's been retaining plenty of business, recently inking a $330 million deal (over seven years) with ING, for example. One advantage it has is its focus on North America, doing less business in troubled Europe than many rivals are. Management signaled its bullishness in the second quarter by buying back $358 million worth of shares.
Among holdings in which Ruane, Cunniff, & Goldfarb increased its stake was World Fuel Services (NYSE: INT ) , which sells fuel to commercial airlines, private aircraft, tanker fleets, cruise ships, and the military. Over the past three years, its revenue growth averaged 44% annually, and EPS growth averaged 11%. The company is likely to benefit if oil prices rise further, and there's a lot of potential in serving the shipping industry, too.
Ruane, Cunniff, & Goldfarb reduced its stake in lots of companies, including Corning (NYSE: GLW ) and First Solar (Nasdaq: FSLR ) . Corning has found much success with its Gorilla Glass, embedded in millions of mobile devices -- and new devices regularly making their debut, such as the upcoming iPhone 5. Its new Willow Glass is exciting, too -- it's flexible! Weak demand for its LCD offerings has hurt Corning, but the company is a major fiber provider for growing networks, its revenue growth is picking up, and patient investors can collect a 2.4% dividend yield.
First Solar has fallen close to 75% over the past year, facing tough competition, supply and-demand issues, threatened government subsidies, and ever-changing technologies. It also recently announced a slowdown at an Arizona solar-power plant and got investors worried that it may have gotten ahead of itself and may even have recognized some revenue prematurely. Still, it posted strong results last month, after a string of ugly quarters, and has high hopes for its projects in emerging markets such as India.
Finally, Ruane, Cunniff, & Goldfarb unloaded several companies, such as insurance broker and reinsurance specialist Willis Group Holdings (NYSE: WSH ) , which got whacked earlier in the year, after posting disappointing earnings. Since then, it has pleased some with rising revenue, successful cost-cutting, and expansion -- such as in China, where it has opened its 22nd location. Low interest rates have hurt the company's performance, though, and they're not expected to rebound any time soon.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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