Active Stock Fund Performance Consistency
Recently, Valeant Pharmaceuticals (VRX) made some big news: because of its controversial business model, the stock took a big beating, losing more than 60% in the short span of two months. One of the biggest shareholders, hedge fund Pershing Square managed by Bill Ackerman, was greatly affected. His high profile defense of the stock has created a sensation among main stream media. However, the story does not stop here.
Value investors should know Sequoia Fund (SEQUX). It was the fund recommended by Warren Buffett in 1970s when he closed his investment partnership and instead went t0 manage Berkshire Hathaway. It turned out that Sequoia has Valeant as its biggest holding — around 30% of the fund’s portfolio. Needless to say, the fund’s performance was hit hard.
As it stands right now, Valeant’s controversy has not completely settled. Whether this is a good investment or not remains to be seen. However, what’s more interesting is that this event involves with Sequoia fund, one of the solid funds that has the best long term record. This leads us to investigate in more details on how a group of famous investment funds have done.
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