- The co-manager of the well-regarded Sequoia Fund, Bob Goldfarb, is retiring after major investments in Valeant led to heavy losses at the $5.6 billion fund, the firm said on Wednesday in a letter to shareholders. The big, and disastrous, bet on Valeant prompted a "period of reflection."
- At one point, Valeant investments made up 30% of Sequoia's assets. As Valeant stock plunged from its peak at nearly $260 per share down to its current levels near $30, Sequoia quickly began taking losses and ended the year down 7.3%.
- Co-manager David Poppe will take over as CEO of Ruane, Cunniff & Goldfarb Inc. (the firm behind the Sequoia Fund) and serve as lead manager of Sequoia going forward.
Valeant has claimed another CEO. Two days after announcing the search for a successor to current CEO Michael Pearson, the company's downward spiral prompted Goldfarb's retirement as head of Valeant's largest shareholder.
At one point, Sequoia owned nearly 13 million shares in Valeant. But the mutual fund reportedly sold 1.5 million of those shares last week as they more than halved in value. On March 15, Valeant had cut its sales forecast for 2016 by $1.5 billion and accused its former chief financial officer of "improper conduct." This caused its stock to drop by more than 60%.
"While we have beaten the market over the past decade, through the end of 2015, our investment in Valeant has diminished a record that we have built over two generations and in which we take great pride," the firm said in its letter. "The Valeant experience has spurred a period of reflection."
The stock has stabilized somewhat this week despite the turmoil at the top. Activist investor and Valeant backer Bill Ackman joined Valeant's board of directors, increasing the representation of his firm Pershing Square Capital. Pershing Square is Valeant's second largest investor, owning 9% of the company.