Every quarter, fund managers have to disclose what they've bought and sold. 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, like Warren Buffett a student of value investing giant Benjamin Graham. 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 2011, the fund gained a cumulative 24,900%, versus 5,800% for the S&P 500. Annualized, that's 14% versus 10%. Over the past decade, which has been a challenging one for the stock market, Sequoia averaged 5.6% annually, versus 2.9% for the S&P 500.
Ruane, Cunniff, & Goldfarb's overall portfolio (which may contain holdings other than those of the flagship Sequoia fund) totaled $11.5 billion in value as of Dec. 31, 2011. The company's top three holdings, representing about 35% of its total asset value, were Valeant Pharmaceuticals, Berkshire Hathaway, and TJX.
So what does Ruane, Cunniff, & Goldfarb's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Netflix
Sohu has attracted many comers, operating a rapidly growing, online business based in populous China. But it's volatile, too, as demonstrated by a recent 15% drop when its management lowered expectations. The company is debt-free and has ample cash, and has diverse operations, such as online gaming, search, browsers, mobile communications, and more.
Among holdings in which Ruane, Cunniff, & Goldfarb increased its stake was Praxair, specializing in industrial gases, coatings, and more. It has investors divided over its decision to issue debt to buy back shares. Reducing the share count can enrich existing shareholders, but with the stock seeming fairly valued and possibly a little ahead of itself, shares being bought don't seem to be bargains. Unambiguously in the company's plus column are its growing dividend and its big backlog of orders.
Ruane, Cunniff, & Goldfarb reduced its stake in a lot of companies, including Walgreen
Finally, Ruane, Cunniff, & Goldfarb unloaded several companies entirely, such as Akamai
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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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Netflix, Berkshire Hathaway, and Amazon.com, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Berkshire Hathaway and Amazon.com. Motley Fool newsletter services have recommended buying shares of Netflix, Berkshire Hathaway, Amazon.com, and Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.