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<ul><li>An investment adviser that traces its origins to <keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> likely netted a nearly $900 million gain on <keyword id="2442393" type="COMPANY" weightage="60" keywordseo="Wayfair">Wayfair</keyword> in under three months.</li><li>Ruane, Cunniff &amp; Goldfarb bolstered its position in the online home-goods retailer to 5.2 million shares as of March 31, and the Sequoia Fund it manages also built a stake of 1.9 million shares.</li><li>Wayfair's stock price has soared 230% since then, lifting the combined value of those investments from about $380 million to $1.25 billion.</li><li><keyword id="9350590" type="UNKNOWN" weightage="60" keywordseo="bill-ruane">Bill Ruane</keyword> founded Sequoia Fund in 1970 at Buffett's request, as the famed investor was closing his partnership to focus on Berkshire Hathaway and wanted Ruane to take on his partners as investors.</li><li><a href="https://www.businessinsider.com/">Visit Business Insider's homepage for more stories</a>.</li></ul>An investment adviser with historic links to Warren Buffett was <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-cut-goldman-sachs-stake-84-percent-2020-5-1029207920">more daring than the Berkshire Hathaway boss in the first quarter</a>, and as a result it probably scored an almost $900 million gain on a single stock in less than three months.Ruane, Cunniff &amp; Goldfarb raised its stake in <a href="https://markets.businessinsider.com/stocks/w-stock">Wayfair</a> by 30% <a href="https://www.sec.gov/Archives/edgar/data/1616707/000161670720000040/0001616707-20-000040-index.htm">between February 18 and March 31</a>, after boosting its position in the online furniture-and-homeware retailer by 39% in the fourth quarter of 2019, <a href="https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&amp;CIK=0001720792&amp;owner=exclude&amp;count=40&amp;hidefilings=0mp;hidefilings=0">SEC filings show</a>. The purchases meant it owned 5.2 million Wayfair shares, or 5.5% of the company, at the end of March. Wayfair stock has skyrocketed 230% since then, lifting the value of RCG's stake from about $280 million to $920 million.Read more: <a href="https://www.businessinsider.com/3-part-long-short-investing-strategy-market-beating-mitch-rubin-2020-6">Mitch Rubin's fund has used a unique approach to reap 26% returns and double client assets this year. He breaks down his 3-part process for deciding which stocks to buy — and what to bet against.</a>RCG also bet on Wayfair via the Sequoia Fund, the $3 billion mutual fund it manages. Sequoia took a position in the e-commerce group in the third quarter of 2019, then almost doubled its stake to 1.9 million shares by the end of March, <a href="https://www.sec.gov/cgi-bin/browse-edgar?company=sequoia+fund&amp;owner=exclude&amp;action=getcompanytcompany">SEC filings show</a>. Those shares have surged in value from about $100 million to $330 million.The upshot is that the combined value of RCG's direct investment and its Sequoia Fund bet has soared from roughly $380 million to $1.25 billion — an $870 million gain in less than 10 weeks..RCG declined to comment when contacted by Business Insider about the gains.The adviser traces its origins to 1970, when the late Bill Ruane cofounded the Sequoia Fund at Buffett's request. Buffett was closing his partnership to focus on <a href="https://markets.businessinsider.com/stocks/brk-b-stock">Berkshire Hathaway</a>, and asked Ruane to take on his partners as investors.Read more: <a href="https://www.businessinsider.com/top-investor-reveals-trend-boosting-utilities-shares-top-stock-picks-2020-6">Utility stocks are a haven for investors in uncertain times. The CEO of a $3 billion asset manager reveals a decadelong trend that's boosting utilities — and shares his 3 top picks.</a>Buffett's admiration for his former Columbia University classmate is clear. While searching for his successor as Berkshire's investment chief in 2007, Buffett told <a href="https://www.wsj.com/articles/SB117769304545985007">The Wall Street Journal</a>, "I'm looking for another Bill Ruane."RCG is a longtime fan of Buffett too. It owned $550 million in Berkshire stock at the end of March, accounting for nearly 9% of its portfolio's total value. Moreover, the Sequoia Fund held $168 million in Berkshire stock on March 31, making up 5.5% of its portfolio.

An investment adviser with historic ties to Warren Buffett likely scored a $900 million gain on Wayfair stock in less than 10 weeks

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Thomson ReutersCompany logo of Valeant Pharmaceuticals International Inc is seen at its headquarters in Laval</div></div></div>Valeant has cost one <a href="http://www.bloomberg.com/news/articles/2012-01-05/for-sequoia-life-after-warren-buffett-is-sweet">legendary value investor</a> his job. Bob Goldfarb, CEO of Ruane, Cunniff &amp; Goldfarb, and the co-manager of the company's flagship Sequoia Fund - which was at one time Valeant's largest investor - is retiring from his roles at the firm.In a <a href="http://www.sequoiafund.com/Sequoia_clientletter.pdf">letter to clients and shareholders posted Wednesday</a>, Ruane, Cunniff &amp; Goldfarb's David Poppe - who will take over the CEO role at the firm and control of Sequoia Fund - said, "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."Poppe added that, "We are a loyal, dedicated and intensely driven group, and to the extent that we have lost any of our investors' confidence, we are determined to win it back."Last week, <a href="http://news.yahoo.com/sequoia-fund-sold-1-5-million-valeant-shares-002123990--sector.html">the fund sold 1.5 million shares</a> of Valeant. Year-to-date, Sequoia fund is <a href="http://www.sequoiafund.com/">down</a> just under 11% as of Wednesday's close. Ruane, Cunniff &amp; Goldfarb is the second-largest shareholder of Valeant owning about 35.4 million shares, according to data from Bloomberg.Bill Ackman's Pershing Square is the largest shareholder, owning over 38 million shares of the company. Earlier this week, <a href="http://www.businessinsider.com/valeant-has-been-halted-for-news-pending-and-everyone-is-guessing-the-reason-why-2016-3">Valeant announced Ackman would join its board of directors</a>. Back in October, Sequoia <a href="http://www.businessinsider.com/sequoia-losing-on-valeant-stake-2015-10">defended its investment in Valeant</a> in a letter to investors but admitted that the losses in the stock - which to that point totaled around 50% - had hurt. "This has caused an extraordinary level of pain, made worse because the most serious allegation leveled against Valeant - that it set up specialty pharmacies as a way to create fraudulent sales and inflate its reported growth rate - is false," Poppe and Goldfarb wrote back in October."As an academic case study, Valeant would be fascinating. As a real life experience, it hurts."Valeant shares are down about 70% from when that letter was published. Wednesday's note to clients was more conciliatory, with Poppe writing that the Valeant experience, "has spurred a period of reflection.""While our commitment to a value-oriented strategy grounded in extensive primary research remains as strong as ever, the Valeant experience has spurred a period of reflection," Poppe wrote."Going forward, we have resolved to take a more collaborative approach to constructing the portfolio that will feature a more significant role for our senior analysts."He added:"As we have noted many times over our history, it is inevitable that from time to time, our concentrated approach to portfolio construction will cause us to diverge from the market averages. In 1999, Sequoia underperformed the S&amp;P index by 37 percentage points. Over 1972 and 1973, we underperformed by 23 percentage points. Though past performance is obviously no guarantee of future results, and though different factors admittedly drove each of these rough patches, we have every expectation that we will recover from this one by staying focused on our core principles of outstanding investment research, thoughtful security selection and stringent price discipline."<a href="http://www.sequoiafund.com/Sequoia_clientletter.pdf">Read the full letter here »</a> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/marines-attack-helicopter-military-weapon-zulu-cobra-2016-3">The 'Zulu Cobra' helicopter is one of the Marines' most powerful weapons</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="0zb3dnMTE6-QawCIxD9EmsObwInmKKBb" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

The CEO of one of Valeant's largest investors is retiring

Warren Buffett's right-hand man, Charlie Munger, is not a fan of the controversial pharmaceutical company Valeant. According to a <a href="http://www.bloomberg.com/news/articles/2015-11-01/munger-isn-t-done-bashing-valeant-after-months-of-holding-nose">report from Bloomberg News</a>, Munger called Valeant's core strategy of buying smaller pharmacies and then raising prices of their drugs "deeply immoral."Bloomberg added that Munger, speaking on Saturday, said the company's practices were "similar to the worst abuses in for-profit education."Back in March, <a href="http://www.forbes.com/sites/antoinegara/2015/03/26/kraft-foods-warren-buffett-3g-ackman-wall-street-buy-hold-kingpins/">Forbes reported</a> that at the annual meeting for the Daily Journal, a small publishing company for which Munger serves as chairman, Munger said, "Valeant is like ITT and Harold Geneen come back to life, only the guy is worse this time."<div class="KonaFilter image-container display-table"><div><div class="image on-image">Lane Hickenbottom/ReutersCharlie Munger.</div></div></div><a href="http://fortune.com/2015/10/30/valeant-itt-charlie-munger/">Writing in Fortune last week</a>, Josh Brown outlined just how damning that comparison was, as Geneen is seen as the poster child for the accounting trickery that defined the conglomerate craze of the 1960s and 1970s. The basic strategy was to rapidly acquire companies to cover up losses of its already-owned companies, thereby making the whole enterprise look profitable when it fact it very much was not.Now, Munger's latest comments on the matter aren't a huge expansion on what he'd previously said about Valeant, and we'd note that Munger and Berkshire Hathaway - Munger is the vice chairman of Berkshire - haven't, to this point, been involved in Valeant and so Munger is just riffing on a thing he's thinking about (or rather, being asked about).But Munger's comments haven't gone unacknowledged, as back in May, hedge fund Ruane, Cunniff &amp; Goldfarb, <a href="http://www.businessinsider.com/sequoia-losing-on-valeant-stake-2015-10">which runs the $7.5 billion</a><a href="http://www.businessinsider.com/sequoia-losing-on-valeant-stake-2015-10"> Sequoia Fund</a>, Valeant's largest shareholder that last held 33.88 million shares according to filings from the SEC, <a href="http://www.sequoiafund.com/Reports/Transcript15.htm">was asked about Munger's comments</a> at its investor day.Sequoia's Bob Goldfarb said in May, "My guess, when I saw the comments, was that Charlie might have been targeting Valeant's accounting," adding that Sequoia added back restructuring charges incurred by Valeant to the purchase price when the company and other analysts add back the charges to derive cash earnings. (For interested parties, a <a href="http://www.sequoiafund.com/Reports/Transcript15.htm">full read of the transcript</a> from Ruane, Cunniff &amp; Goldfarb's investor is well worth the time.)Sequoia Fund, in a <a href="http://www.businessinsider.com/sequoia-losing-on-valeant-stake-2015-10">recent letter to investors</a>, said, "This has caused an extraordinary level of pain, made worse because the most serious allegation leveled against Valeant - that it set up specialty pharmacies as a way to create fraudulent sales and inflate its reported growth rate - is false. As an academic case study, Valeant would be fascinating. As a real life experience, it hurts."As for the latest actual news on Valeant, short-selling firm Citron Research was scheduled to release its latest findings on Monday, about <a href="http://www.businessinsider.com/valeant-shares-crash-october-21-2015-10">two weeks after the firm's report</a> on Valeant comparing it to Enron sent the stock into a tailspin. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/invest-warren-buffett-berkshire-hathaway-2015-2">How to invest like Warren Buffett</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="s3M3ZhbDpuxZm0OsRtnfcALpwlLIe4o6" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

CHARLIE MUNGER: Valeant's pricing strategy is 'deeply immoral'

The IPO of low-cost airline IndiGo saw a promising start on first day and the company saw QIBs bidding for Rs 97, 45, 590 shares. 
 The <keyword id="2351966" type="ORGANIZATION" weightage="20" keywordseo="InterGlobe-Aviation">InterGlobe Aviation</keyword>’s, which is the promoter of IndiGo, qualified institutional investor (QIB) quota was oversubscribed within the first hour. 
 
As per the NSE data, all the bids came in from FIIs. 
 
Reportedly, the company holds market share of 35.3% in aviation sector and allotted shares to 43 anchor investors, including Merrill Lynch, the Singapore government-owned GIC, Goldman Sachs, Ruane, Cunniff &amp; Goldfarb, Fidelity Investments and DSP Blackrock, in a pre-issue share sale. 
 
InterGlobe Aviation shares are on block at a price band of Rs 700-765 per share. It had lowered down the initial share sale size to more than Rs 3,000 crore.

IndiGo, India’s biggest IPO in 3yrs is already a blockbuster! Subscribed 33% on Day 1

The initial public offering (IPO) of IndiGo was oversubscribed on the second day of <keyword id="1036807" type="UNKNOWN" weightage="20" keywordseo="book-building">book building</keyword> as investors bade for 3,02,19,735 shares against 3,01,22,088 offered. This happened manly due to subscription frenzy by qualified institutional bidders (QIBs). However, the response from non-institutional and <keyword id="6416579" type="UNKNOWN" weightage="100" keywordseo="Retail-investors">retail investors</keyword> remains tepid. 

	According to data available on National Stock Exchange (NSE), there were bids for 2,95,20,480 shares against the quota limit of 85,22,935 on offer. The bids came in mostly from FIIs. 
 

	The QIB quota has been subscribed 3.46 times so far.
 

	Non-institutional investors bade for 45,645 shares against the quota limit of up to 58,19,746. Retail investors, on the other hand, bid for 6,19,230 shares against 13,579,407 shares set aside for the category.
 On Monday, the allotted shares to 43 anchor investors, including <keyword id="6374847" type="CITY" weightage="60" keywordseo="Merrill-Lynch">Merrill Lynch</keyword>, GIC, <keyword id="6361649" type="CITY" weightage="60" keywordseo="Goldman-Sachs">Goldman Sachs</keyword>, Ruane, Cunniff &amp; Goldfarb, <keyword id="117850" type="COMPANY" weightage="100" keywordseo="Fidelity-Investments">Fidelity Investments</keyword> and DSP Blackrock, in a pre-issue share sale. 

	The allocation to anchor investors constituted nearly 30% of the total issue. It fetched a total of Rs 832 crore. 

	 
	(Image: Indiatimes)

IndiGo IPO got oversubscribed! Retail investors remains tepid

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">ReutersA Fulton Hotshot lights a controlled burn on the so-called "Rough Fire" in the Sequoia National Forest, California, August 21, 2015.</div></div></div>Valeant Pharmaceutical's largest investor, the Sequoia Fund, paid out hard cash to speak with former employees at the specialty pharmacy that's been at the center of Valeant's stock price collapse, <a href="http://www.wsj.com/articles/biggest-valeant-holder-plumbed-philidor-ties-1447202547?mod=yahoo_hs&amp;alg=y">The Wall Street Journal's Jonathan Rockoff and Michael Rothfeld report.</a>The Sequoia Fund's manager told the newspaper that it paid five former Philidor employees and one current employee for information. Sequoia also offered one former Philidor employee $1,000 to talk for two hours, the WSJ report said. Valeant's stock has fallen more than 43% since <a href="http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf">Citron Research</a>, the short-selling firm run by Andrew Left, published a report in October asking whether Valeant was operating an <a href="http://www.businessinsider.com/valeant-shares-crash-october-21-2015-10">Enron-like fraud</a>.The <a href="http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf">report</a> focused on the company's mysterious relationship with Philidor, a specialty pharmacy that distributes prescription drugs for Valeant. Citron pointed out that Valeant is the only supplier to Philidor, and it also has an option to buy the company. On Wall Street, no one had really heard of Philidor until last month. Read the full Journal report <a href="http://www.wsj.com/articles/biggest-valeant-holder-plumbed-philidor-ties-1447202547">here</a>.<h2>Phantom sales</h2>Citron accused Valeant of using Philidor to book "phantom sales."Valeant has denied any wrongdoing. The company has also now severed ties with Philidor.Sequoia, the $7.5 billion mutual fund managed by Robert Goldfarb and David Poppe, has been a long-time shareholder of Valeant. Ruane, Cunniff, and Goldfarb, which runs the Sequoia Fund, last held 33.88 million shares, or a 9.8% stake, according to regulatory data compiled by Bloomberg. The investment <a href="http://www.sequoiafund.com/Reports/Quarterly/SemiAnn15.pdf">makes up 28.7%</a> of the mutual fund's portfolio.Despite Valeant's massive decline, Sequoia's managers <a href="http://www.businessinsider.com/sequoia-losing-on-valeant-stake-2015-10">have defended the company.</a>"This has caused an extraordinary level of pain, made worse because the most serious allegation leveled against Valeant - that it set up specialty pharmacies as a way to create fraudulent sales and inflate its reported growth rate - is false. As an academic case study, Valeant would be fascinating. As a real life experience, it hurts," the mutual fund's letter to shareholder said.The mutual fund first got into the stock in the <a href="http://www.bloomberg.com/news/articles/2014-04-22/sequoia-managers-take-valeant-gains-to-3-8-billion-on-takeover">third quarter of 2010</a>, according to Bloomberg. For a long time, the stock had been a huge winner for them. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/everyday-phrases-smart-people-say-incorrectly-statute-2015-10">Everyday phrases that even smart people say incorrectly</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="44Z3ZoeDrznjy0zyuh6chLpAhZsFsPBY" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Valeant's biggest shareholder paid a former employee $1000 to get info on Philidor

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Thomson ReutersA tourist carries an umbrella during a rain storm on Wall St. in New York's financial district </div></div></div>Finance Insider is Business Insider's midday summary of the top stories of the past 24 hours.To sign up, scroll to the bottom of this page and click "Get updates in your inbox," or <a href="http://www.businessinsider.com/newsletter/prime-finance?IR=T&amp;utm_source=businessinsider&amp;utm_medium=finance_insider&amp;utm_term=finance_insider_leadgen_text_link&amp;utm_content=leadgen_text_link&amp;utm_campaign=finance_insider_leadgen_link">click here.</a>It should come as no surprise that first-quarter results will be pretty horrendous for Wall Street.A collapsed oil price, concerns around Chinese growth and negative rates combined to create <a href="http://www.businessinsider.com/there-has-been-a-perfect-storm-on-wall-street-2016-3">"a perfect storm",</a> according to Macquarie's banks analyst, David Konrad.How bad is it? Well, it is shaping up to be the <a href="http://www.businessinsider.com/worst-q1-for-banks-since-2009-2016-3">worst first quarter for investment banking fees since 2009. </a>Industry-wide global investment banking fee revenue is down 36% from the first quarter of last year. You can see how much the top <a href="http://www.businessinsider.com/wall-street-banking-revenues-q1-2015-9">Wall Street banks have earned in fees this year here.</a> In other news, Yahoo's activist investor is <a href="http://www.businessinsider.com/yahoos-activist-investor-just-confirmed-it-is-launching-a-proxy-war-to-remove-the-companys-board-read-the-letter-in-full-2016-3">making a bid to remove the company's entire board</a>, and everyone is <a href="http://www.businessinsider.com/china-corporate-bond-bubble-to-pop-2016-3">worried that a third China bubble is about to pop</a>.Donald Trump invested millions in hedge funds, <a href="http://www.businessinsider.com/r-trumps-investment-funds-lose-money-billionaire-unfazed-2016-3">and they're not doing very well</a>.Ford CEO Mark Fields stopped by the Business Insider office for a chat, and said he doesn't worry about Tesla, Apple, or Trump. He is worried about currency manipulation though, <a href="http://www.businessinsider.com/ford-ceo-mark-fields-interview-2016-3">saying: "We can't compete with central banks."</a>Lastly, Wall Street rivals are going <a href="http://www.businessinsider.com/bloomberg-square-mile-relay-race-in-new-york-2016-3">head-to-head in an epic relay race in New York.</a>Here are the top Wall Street headlines at midday:<a href="http://www.businessinsider.com/wall-street-banks-ranked-2016-3">The definitive ranking of Wall Street investment banks in every business line</a> - We have new data on how Wall Street banks stack up in every business line, and there is one clear winner.<a href="http://www.businessinsider.com/r-deutsche-bank-hiring-100-staff-to-boost-equities-trading-source-2016-3">Deutsche Bank is hiring 100 people to boost its equities trading</a> - Deutsche Bank is hiring about 100 people to boost its equities trading operations as it seeks to recover ground in an area seen as vital to its new strategy.<a href="http://www.businessinsider.com/bob-goldfarb-resigns-from-sequoia-2016-3">The CEO of one of Valeant's largest investors is retiring</a> - Bob Goldfarb, CEO of Ruane, Cunniff &amp; Goldfarb, and the co-manager of the company's flagship Sequoia Fund - which was at one time Valeant's largest investor - is retiring from his roles at the firm.<a href="http://www.businessinsider.com/ben-axler-of-spruce-point-capital-2016-3">A short-seller you've never heard of has been quietly killing it</a> - You've probably never heard of Ben Axler, a short-seller who's been building an impressive track record online for spotting corporate frauds.<a href="http://www.businessinsider.com/career-lessons-erin-callan-2016-3">Erin Callan, former CFO of Lehman Brothers, shares 3 of the most important lessons she's learned during her career</a> - Callan is publishing a book titled "Full Circle: A Memoir of Leaning In Too Far and the Journey Back."<a href="http://www.businessinsider.com/maserati-levante-arrived-in-the-us-2016-3">Maserati's SUV has finally arrived in the US</a> - Maserati chose the New York Auto Show to introduce its long-awaited SUV, the Levante, to the US. Note: There will not be an edition of Finance Insider on Friday March 25.

We knew it was bad on Wall Street ? now we're finding out just how bad

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Sequoia Fund, the large mutual fund managed by Robert Goldfarb and David Poppe, has posted a letter on <a href="http://www.sequoiafund.com/about.htm">the homepage of its website</a> defending its massive investment in Valeant Pharmaceuticals.Shares of the Canadian drug company have collapsed since last Wednesday. That is&#xa0;when&#xa0;<a href="http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf">Citron Research</a>, the short-selling firm run by Andrew Left,&#xa0;published a report asking whether Valeant was operating an <a href="http://www.businessinsider.com/valeant-shares-crash-october-21-2015-10">Enron-like fraud</a>.Valeant's share price has declined by more than 40% since the report came out."We are witnessing a series of attacks against the management credibility and business practices of our largest holding, Valeant Pharmaceuticals International, Inc. Over the past few months, the market capitalization of its shares has fallen by more than 50%," the letter, dated October 28, began.&#xa0;"This has caused an extraordinary level of pain, made worse because the most serious allegation leveled against Valeant - that it set up specialty pharmacies as a way to create fraudulent sales and inflate its reported growth rate - is false. As an academic case study, Valeant would be fascinating. As a real life experience, it hurts."A&#xa0;lot of funds have gotten hit&#xa0;by Valeant's share price decline.&#xa0;The stock&#xa0;ranked&#xa0;No. 10 on&#xa0;Goldman Sachs' stocks that "matter most" to hedge funds list for the second quarter.Sequoia, which manages $7.5 billion according to Morningstar, has been a long time shareholder of Valeant. The mutual fund first got into the stock in the <a href="http://www.bloomberg.com/news/articles/2014-04-22/sequoia-managers-take-valeant-gains-to-3-8-billion-on-takeover">third quarter of 2010</a>, according to Bloomberg. For a long time, the stock had been a huge winner for them.Ruane, Cunniff &amp; Goldfarb, which runs the Sequoia Fund, last held&#xa0;33.88 million shares, or a 9.8% stake, according to regulatory data compiled by Bloomberg. The fund is down around 3.8%, according to Morningstar.What's more,&#xa0;<a href="http://www.wsj.com/articles/two-of-five-independent-directors-of-sequoia-fund-valeants-largest-shareholder-resign-1446141695">The Wall Street Journal's Rob Copeland is reporting</a>&#xa0;that two of the mutual fund's board members,&#xa0;Vinod Ahooja and Sharon Osberg,&#xa0;resigned over the weekend after previously voicing concerns about the fund's investment in Valeant. The Valeant stake comprises almost 30% of the portfolio.&#xa0;<h2>Blaming the short sellers</h2>Citron's <a href="http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf">report</a>&#xa0;focuses&#xa0;on the company's relationship with Philidor, a specialty pharmacy that distributes prescription drugs for Valeant. Valeant is the only supplier to&#xa0;Philidor, and it also has an option to buy the company.&#xa0;On Wall Street, no one had really heard of Philidor until earlier this month.Citron has accused&#xa0;Valeant of using Philidor, and an unknown number of specialty pharmacies like it, to generate fake invoices so it can book revenue for sales that never happened.Valeant has categorically denied all of Citron's allegations.In their letter, Sequoia's managers also said they don't think there's anything illegal about Philidor.&#xa0;"Our consultations with lawyers who specialize in the pharmaceutical industry lead us to believe there is no legal reason Valeant can't advise, control or own Philidor. At least one other large drug company owns its own pharmacy. There is no point in trying to conceal the relationship."&#xa0;Sequoia's management went on to blame Citron and Left for exploiting negative sentiment around the stock.The fund managers then went on to praise Valeant's CEO Michael Pearson. Still, the think the company could do more to work on its reputation.&#xa0;We work hard to understand Valeant and its business model. Our belief has always been that Pearson is honest and extremely driven. He does everything legally permissible to maximize Valeant's earnings. One lesson of recent events is that sometimes doing everything legally permissible to maximize earnings does not create shareholder value. All enduring businesses must strive to earn and maintain a good reputation. Because of its large indebtedness and need to tap the capital markets to make acquisitions Valeant in particular needs the confidence of the credit market to execute its business model. The company has no large debt maturities over the next two years, and we believe it intends to pay down scheduled maturities through 2018 out of cash flows. We'd like Valeant to consider paying down more of its debt early and adopting a conservative capital structure that insulates it from the possibility of long-term tightness in the credit markets.We have been asked by clients and friends why we own such a company. In our view, Valeant is an aggressively-managed business that may push boundaries, but operates within the law. When ethical concerns arise, management tends to address them forthrightly, but in the moment. We would stress the importance of taking a more systemic approach to managing business practices with an eye on the company's long-term corporate reputation. We believe the company will learn from the current crisis the importance of reputation and transparency to all stakeholders, especially the shareholders.Here's a copy of the letter:&#xa0;<div><p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a title="View Letter to Clients and Shareholders on Scribd" href="https://www.scribd.com/doc/287730856/Letter-to-Clients-and-Shareholders" style="text-decoration: underline;">Letter to Clients and Shareholders</a></div>&#xa0; <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/how-john-paulson-profited-off-2008-recession-2015-10">How hedge fund legend John Paulson built an empire off the 2008 financial crisis</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="g4NDczeDoqNCJs7aho1J7sm93MKzYZjd" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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