Valeant Pharmaceuticals Intl Inc. is no longer regarded as the Wall Street precious it was before for less than a year ago. The Sequoia Fund – one of the major investors of the stock, announced on Friday that it has cut its stake in the company since March.
After the cutting of stake was announced, it was followed by a new policy, citing a 20% limit applied on the percentage of its portfolio, which can be invested in any one security.
In 1970, Warren Buffett’s friend has started the Sequoia Fund, comprising of $5.1 billion assets as of Thursday, as per Morningstar Inc. The mutual fund is managed by Ruane, Cunniff & Goldfarb Inc., among other assets.
Meanwhile, Ruane Cuniff currently holds about 31.4 million shares of Valeant as of March 31, suggesting it the biggest shareholder of the company. Hence, the Sequoia fund holds 11.1 million Valeant stocks as of March 31, according to the filing with regulatory.
As the Valeant shares reached its peak level in August last year, the investment of the fund in Valeant accounted for over 30% of its portfolio.
Hearing this, shares of Valeant declined by nearly 90% during the federal investigations on its controversial pricing, including its accounting, and distribution procedures. The downfall of the company has driven about 29% loss for the Sequoia Fund last year, making the leading fund to perform worse among its peers.
Valeant posted 73% losses of its value since the year started, and $860 million were pulled out from Sequoia during the time.
Ruane, Cuniff & Goldfarb Inc. executives battled questions for two-and-a-half hours in New York about their investment in Valeant and potential prospects for the Sequoia fund. Size of the larger stakes in the fund going forward to cap exposure was given limits to a situation alike with Valeant in the future.
Earlier in 2000, more than 30% were invested by the Sequoia in its portfolio in Mr. Buffett’s Berkshire Hathaway.
The lead manager of the fund David Poppe said, “There were people who were angry with us and let us know how hurt they felt, but in general the tone was respectful and productive,”
Robert Goldfarb resigned in March and was later replaced by Mr. Poppe. “Hopefully people came away at least feeling that we’d addressed their concerns directly,” he added.
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