Ruane, Cunniff & Goldfarb LP, an investment management firm, published its ‘Sequoia Fund’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 14.68% was recorded by the fund for the Q4 of 2020, outperforming its S&P 500 benchmark that returned 12.15%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Ruane, Cunniff & Goldfarb, in their Q4 2020 Investor Letter said that they acquired a position in The Walt Disney Company (NYSE: DIS), and believes that there’s still a wide room for growth in the company. The Walt Disney Company is a diversified global mass media and entertainment conglomerate that currently has a $311.8 billion market cap. For the past 3 months, DIS delivered a decent 41.76% return and settled at $171.88 per share at the closing of January 28th.
Here is what Ruane, Cunniff & Goldfarb has to say about The Walt Disney Company in their investor letter:
“Disney is on the global trend toward subscription-based streaming video consumption, which we think is still in its early innings. As people increasingly watch their TV and movies via apps instead of cable bundles, we expect a relatively egalitarian media ecosystem that historically supported many winners to become much more elitist. The streaming model heavily favors scaled early movers, who benefit from a virtuous cycle in which massive content investment attracts incremental subscribers and revenues, which enable further content investment, which yields still more subscriber growth.
Disney is investing heavily to drive this virtuous cycle, which is depressing their current profits, but people can only watch so much TV and wrap their arms around so much selection, which means that the growth of programming spend will eventually have to slow. If the world’s two most compelling collections of streamed video content continue to attract incremental subscribers amidst a moderating pace of investment, then content cost per subscriber will begin to fall, widening competitive gaps that are already very substantial by layering a cost advantage on top of a product quality advantage. As a result of this dynamic– which we think competitors will struggle to replicate– we believe that the leaders of the video entertainment industry’s streaming era will be far larger and more profitable than those of the cable era. While this possibility is by no means lost on the stock market, we invested in Disney because we believed their prices still failed to discount the degree to which we expect a small handful of victors to take most of the streaming era’s significantly greater spoils.”
Last November 2020, we published an article telling that The Walt Disney Company (NYSE: DIS) was in 112 hedge fund portfolios. Its all time high statistics is 118. DIS delivered a 24.27% return in the past 12 months.
Our calculations show that The Walt Disney Company (NYSE: DIS) ranks 14th in our list of the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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