Analyzing Giverny Capital (EDIT)

This guy may be unknown in the rest of Canada, but in Quebec, François Rochon and his fund, Giverny Capital, are known by many investors.

The results of the fund have almost always been great. I believe that Rochon has been influenced a lot by Sequoia Fund. His stock selection has always been pretty solid. In fact, in my opinion, he's better than a lot of superinvestors.

Here's a very interesting article I found yesterday. It presents Giverny's top 5 positions (about 26-27% of the total portfolio). It's not a magic portfolio (high ROE and low PE). It's more a moat portfolio. 

EDIT: These are not the 5 biggest positions of Giverny Capital. They're 5 favorites of the fund, but they represent a big part of it anyway. Merci à Etienne Pouliot. 

1- Carmax (8% of the portfolio): I prefer Lithia Motors (which I own) to Carmax but that business is solid. However, I wouldn't put 8% of my portfolio in something that much related to the general state of economy (Beta = 1,5). You may say: "Used cars aren't that impacted by a recession", yeah, right, but drugs aren't affected at all by a recession.

2- Disney (7,7% of the portfolio): Good company, grows in a steady way. Temporary problems for Disney but I don't see why the company couldn't get back on track. The ROE is good but not spectacular. I may buy shares someday because that company has a great moat and the balance sheet is very good. Sometimes, I wonder why Apple doesn't buy Disney.

3- O'Reilly (4,2% of the portfolio): Incredible company with a very high ROE. But it's very expensive. I prefer Linamar, which is less incredible but way cheaper, and still good.

4-  Mohawk (3,5% of the portfolio): That stock was one of the worst performers of Sequoia Fund for a couple of years. However, the growth is back in a spectacular way. The PE ratio is at an historical low and the growth is almost at an historical high. The ROE is OK but not great. I may buy some shares of that company too because management is very solid and that business has a great moat (leaders of the carpet).

5- Fortune Brands Home & Security (3,2% of the portfolio): I didn't know about this company. After a quick look at number, I'm not interested by it. The ROE is average and the PE is high. The growth in the last 5 years has however been impressive.

As I said before, I'm more a guy of balance sheet and high ROE. But moats are very important. And Giverny Capital seem to be looking for moats first and foremost.

It's a lesson for me.