Head over to the Washington Post for an in-depth article on the Sequoia Fund and it's expensive mistake in Valean stock.
A big miscalculation on one stock, Valeant Pharmaceuticals International, has cost the Sequoia Fund billions of dollars and compromised its reputation for market-beating performance earned over decades.
To get a sense of how sterling Sequoia's reputation was:
Sequoia grew to maturity under the glow of Buffett, the folk-hero money mind whose stewardship of Berkshire Hathaway prompted a national following based on the virtues of common-sense investing and avoiding mistakes.
Regarding Valeant (VRX):
How, with all its deep research and money minds, did Sequoia get this so wrong?
The decision to invest and stick with Valeant “was not about one person,” Poppe said.
There is no good answer.
“It almost begins to feel like a Greek tragedy,” McDevitt said. “Goldfarb had been revered in the industry, and rightfully so. For years, he would get it right, even when people said it was wrong. If you are successful when the market says you are wrong, it can create a sense of hubris. It can leave you overconfident in your own opinions and can set you up for a big fall. And that is what happened.”
Full article here: