Large Valeant investor sold off remaining stake last quarter
- Sequoia Fund, once one of the largest investors in Valeant Pharmaceuticals, told its shareholders Tuesday it had sold off all of its remaining stake in the troubled drugmaker, cutting ties after watching Valeant stock plunge 80% through June 30.
- At one point, holdings of Valeant stock constituted 30% of Sequoia's assets. But the steady parade of new misfortunes at Valeant led the $4.8 billion mutual fund to pare back its holdings.
- Valeant-related troubles led Bob Goldfarb, a co-manager of the Sequoia Fund who had been a proponent of the company in the past, to retire in March.
While Valeant works to rebuild under new CEO Joseph Papa, the effects of its fall from grace are still being felt.
"Valeant was our largest position to start the year and its 80% decline through June 30 badly penalized our results," the Sequoia Fund wrote in a letter to shareholders.
The mutual fund said it recorded a negative 13.2% return in the first half of 2016, well below the 3.8% return for the S&P 500 index. Much of that decline was due to Valeant holdings.
The Sequoia Fund is run by Ruane, Cunniff & Goldfarb, Inc.
At its peak almost one year ago, Valeant stock was worth nearly $260 per share. But damaging federal investigations into its pricing practices, along with an accounting scandal and a near-default severely damaged the company.
Valeant stock now trades in the low $20s.
When Goldfarb stepped down in March, his successor David Poppe said that the experience with Valeant had led to a period of reflection at the fund.
"Our investment in Valeant has diminished a record that we have built over two generations and in which we take great pride," Poppe wrote at the time.
Sequoia Fund also exited several other positions over this past quarter, selling holdings in Allergan, Idexx Laboratories, and Cabela's.
- Bloomberg Longtime Valeant Investor Sequoia Fund Exits After Losses
- Ruane, Cunniff & Goldfarb Inc. Letter to Shareholders
Follow Ned Pagliarulo on Twitter