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Sequoia News: Fund Reopens to New Investors

The announcement is not a surprise, but the timing is somewhat unusual, at least by historical standards.

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 Sequoia's (SEQUX) advisor announced today that it has reopened the fund to new investors. New investors must buy shares directly through the fund, though, rather than through a third-party brokerage platform. This announcement is not a surprise given that manager David Poppe raised the possibility of reopening in his April 19 letter to shareholders.

The timing of the decision is perhaps somewhat unusual, at least by historical standards. Value-oriented funds such as Sequoia often close to new investors late in a bull market when attractive opportunities may be in short supply. On the other hand, they often reopen to investors in the depths of a bear market when sentiment is negative but low-priced stocks may be plentiful. Indeed, Sequoia has followed this pattern in the past. The fund last reopened to new shareholders in 2008 during the credit crisis before closing again in December 2013 when the market was setting new highs. With U.S. markets not far from their highs currently, this reopening seems to break with past behavior.

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Kevin McDevitt has a position in the following securities mentioned above: SEQUX. Find out about Morningstar’s editorial policies.