Ruane, Cunniff & Goldfarb Inc. Sequoia Q3 2016 Letter
Dear Clients and Shareholders:
The third quarter of 2016 was characterized by a return to normalcy after a tumultuous first half. The Sequoia Fund returned 3.56% vs. a 3.85% return for the S&P 500 Index1. At quarter’s end our cash position stood at 10.2%, reflecting the relatively full valuations we find in the marketplace.
Today our portfolio trades at a modest premium to the S&P 500. If we are correct about the growth trajectory of our portfolio, one of two things will happen: Sequoia will outperform the Index or Sequoia’s PE multiple premium to the Index will diminish. Ultimately, earnings growth drives stock prices, and while we are concerned about sustainability of the market multiple, we are confident our companies can continue to grow.
/span>See performance disclosures below.