Sean Stannard-Stockton - Ensemble Capital Management, Llc Portfolio Q3'2024: Top Holdings & Recent Changes
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Sean Stannard-Stockton, President and Chief Investment Officer of Ensemble Capital Management, continues to demonstrate a disciplined, high-conviction approach to portfolio management. His Q3 2024 portfolio is valued at $1.18 billion and remains concentrated in a select group of high-quality businesses, though the latest 13F filing reveals a notable trend: significant reductions across nearly all top positions. This quarter, Ensemble Capital trimmed exposure to long-held winners such as The Home Depot, Mastercard, Booking Holdings, and Netflix, signaling a cautious stance amid market uncertainty. Despite these cuts, the portfolio’s core philosophy—seeking durable competitive advantages and long-term compounding—remains intact.
Portfolio Overview: Selective Pruning, Enduring Conviction
Portfolio Highlights (Q3 2024): - Market Value: $1,179.3 million - Top 10 Holdings: 66.5% of portfolio - Portfolio Size: 22 positions (down 2 from last quarter) - Average Holding Period: 25 quarters (over 6 years) - Turnover: 9.1%
Ensemble Capital’s portfolio is a study in concentration and patience. The top 10 positions command nearly two-thirds of assets, reflecting Stannard-Stockton’s belief in owning a small number of exceptional businesses for the long term. However, Q3 2024 saw a marked shift: every single top 10 holding was reduced, with cuts ranging from 7.6% at Analog Devices to a striking 24.3% at NVR, Inc.. This across-the-board trimming suggests portfolio rebalancing rather than a loss of conviction, as the core holdings remain largely unchanged in composition—just smaller in size.
The portfolio’s low turnover 9.1% and long average holding period (25 quarters) underscore a buy-and-hold mentality, but the recent reductions highlight Ensemble’s willingness to take profits and manage risk when valuations become stretched or macroeconomic clouds gather. This approach balances the benefits of concentration with the prudence of periodic reassessment.
Holdings Overview: Quality First, Profits Taken
The portfolio’s anchor remains The Home Depot 8.3%, though the position was reduced by 17.5% this quarter. Mastercard 8.0% and Booking Holdings 7.9% also saw double-digit cuts, down 14.0% and 17.9% respectively, while Netflix 7.1% was trimmed by 11.6%. Broadridge Financial Solutions 6.9% and NVR, Inc. 6.9% faced even steeper reductions, down 14.4% and 24.3%.
Technology exposure is maintained through Alphabet (5.8%, reduced 16.9%) and Analog Devices (5.8%, reduced 7.6%), while Paychex 5.0% rounds out the top 10 with a 17.8% cut. Just outside the top 10, Ferrari 4.8% was also reduced by 15.3%.
Despite these reductions, the portfolio’s sector allocation remains diverse, spanning consumer discretionary, financial services, technology, and industrials. The consistent theme is a focus on companies with strong moats, recurring revenue, and pricing power—qualities that have driven Ensemble’s long-term outperformance.
What the Portfolio Reveals
- Quality Over Growth: Ensemble continues to prioritize businesses with durable competitive advantages, even as it takes profits on winners.
- Sector Discipline: The portfolio avoids chasing trends, maintaining a balanced exposure to sectors with proven resilience.
- Risk Management: The across-the-board reductions suggest a defensive tilt, possibly in response to elevated valuations or macroeconomic uncertainty.
- Long-Term Focus: Despite the trimming, the average holding period remains exceptionally long, signaling enduring conviction in the core portfolio.
- Low Turnover: The 9.1% turnover rate reflects a patient, low-friction approach to portfolio management.
Portfolio Concentration Analysis
| Position | Value | % of Portfolio | Recent Change |
|---|---|---|---|
| The Home Depot, Inc. (HD) | $98.2M | 8.3% | Reduce 17.51% |
| Mastercard Incorporated (MA) | $94.0M | 8.0% | Reduce 13.97% |
| Booking Holdings Inc. (BKNG) | $93.5M | 7.9% | Reduce 17.85% |
| Netflix, Inc. (NFLX) | $83.5M | 7.1% | Reduce 11.62% |
| Broadridge Financial Solutions (BR) | $81.9M | 6.9% | Reduce 14.35% |
| NVR, Inc. (NVR) | $81.4M | 6.9% | Reduce 24.27% |
| Alphabet Inc. (GOOGL) | $68.7M | 5.8% | Reduce 16.89% |
| Analog Devices, Inc. (ADI) | $68.1M | 5.8% | Reduce 7.58% |
| Paychex, Inc. (PAYX) | $58.8M | 5.0% | Reduce 17.78% |
The table above illustrates Ensemble’s concentrated approach, with the top 10 holdings accounting for 66.5% of the portfolio. Notably, every position was reduced this quarter, reflecting a disciplined response to market conditions. The largest cuts were in homebuilder NVR, Inc. and payments leader Mastercard, while Analog Devices saw the smallest reduction. This pattern suggests a portfolio-wide reassessment of risk and reward, rather than a loss of faith in any single business.
Investment Lessons from Sean Stannard-Stockton & Ensemble Capital
- Concentration with Conviction: Ensemble’s portfolio demonstrates the power of owning a small number of exceptional businesses for the long term.
- Discipline in Taking Profits: Even the highest-conviction ideas are subject to periodic reassessment and trimming when valuations or risks shift.
- Quality as a North Star: The consistent focus on companies with durable moats and pricing power has been a hallmark of Ensemble’s strategy.
- Patience Pays: The average holding period of 25 quarters underscores the value of letting winners compound over time.
- Risk Management Matters: Ensemble’s willingness to reduce exposure across the board shows that even the best investors remain vigilant about portfolio risk.
Looking Ahead: What Comes Next?
With $1.18 billion in assets and a reduced position size across the board, Ensemble Capital has dry powder for new opportunities. The firm’s history suggests it will remain patient, waiting for the right entry points in high-quality businesses. Given the portfolio’s defensive trimming, investors should watch for potential new additions in sectors where valuations have normalized or growth prospects have improved. The current positioning sets Ensemble up to capitalize on market dislocations while maintaining a core of compounding champions.
FAQ about Sean Stannard-Stockton’s Portfolio
Q: Why did Ensemble Capital reduce so many positions this quarter?
A: The across-the-board reductions likely reflect a combination of profit-taking after strong runs, elevated valuations in some sectors, and a desire to manage portfolio risk amid macroeconomic uncertainty. This is a disciplined response, not a wholesale change in strategy.
Q: How concentrated is Ensemble’s portfolio?
A: The top 10 holdings make up 66.5% of the portfolio, reflecting a high-conviction, concentrated approach. However, the firm is not afraid to trim winners when appropriate.
Q: What sectors does Ensemble favor?
A: The portfolio spans consumer discretionary, financial services, technology, and industrials, with a consistent emphasis on businesses with durable competitive advantages and recurring revenue.
Q: How can I track Ensemble Capital’s portfolio changes?
A: ValueSense provides up-to-date analysis of Ensemble Capital’s 13F filings, with detailed breakdowns of holdings, changes, and portfolio metrics. Remember, 13F filings are reported with a 45-day lag, so the data reflects positions as of the end of the prior quarter.
Q: What is Ensemble’s investment philosophy?
A: Ensemble Capital seeks to own a small number of exceptional businesses for the long term, focusing on quality, moats, and compounding. The firm is patient, disciplined, and willing to trim positions when risk/reward dynamics shift.
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