The Name Behind Buffett's Fund

Introduction

Warren Buffett, known as the \"Oracle of Omaha,\" is one of the most successful investors in history. His investment philosophy, focused on identifying undervalued stocks and holding them for the long term, has made him a billionaire many times over. However, what many people may not know is that Buffett's success is also due in part to the name behind one of his most famous funds - the Sequoia Fund. In this article, we will explore the history and impact of this unique fund.

The Creation of the Sequoia Fund

The Sequoia Fund was created in 1970 by a group of mutual fund managers, including Warren Buffett himself. The fund was named after the largest trees in the world, which grow in California, as a symbol of strength and stability. At the time of its creation, the Sequoia Fund focused solely on investing in domestic companies, with a particular emphasis on small-cap stocks.

The Performance of the Sequoia Fund

The Sequoia Fund quickly became known for its exceptional performance, consistently outperforming its benchmarks and peers. In fact, over the first decade of its existence, the fund delivered an annualized return of 18.6%, compared to the S&P 500's return of 5.9%. This exceptional performance was due in large part to the fund's managers' rigorous research and stock selection process, as well as their willingness to hold onto investments for the long term.

However, the fund's exceptional performance was also due to one particular investment - Berkshire Hathaway. In the early 1970s, the Sequoia Fund invested heavily in Berkshire Hathaway and held onto the stock for many years. As Berkshire Hathaway's stock price skyrocketed, so did the Sequoia Fund's net asset value. In fact, at one point, Berkshire Hathaway accounted for over half of the fund's portfolio.

Despite the fund's success, it was not immune to setbacks. In 2015, the fund suffered significant losses due to its large investment in Valeant Pharmaceuticals, which was embroiled in a scandal. The fund's managers were criticized for their lack of diversification, and the fund's assets under management declined sharply. In response, the fund's managers implemented changes to the fund's investment strategy and management structure.

Conclusion

The Sequoia Fund is a testament to the power of long-term investing and rigorous stock selection. Its success is due in large part to the vision and leadership of its founders, as well as their commitment to sticking to their investment philosophy. While the fund has experienced setbacks, its legacy continues to inspire new generations of investors.