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Painful Valeant Debacle Spurs Improvements at Sequoia

Sequoia shareholders meeting highlights structural changes in investment policy, risk management, and decision-making.

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The  Sequoia (SEQUX) shareholders meeting on May 20 reinforced how much has changed following the fund's disaster with  Valeant Pharmaceuticals (VRX). The past nine months have been extremely painful for shareholders, but it also spurred Sequoia's management to ensure that something similar never happens again. The changes address investment policy, risk management, and decision-making.

Portfolio manager--and now CEO of advisor Ruane, Cuniff, and Goldfarb--David Poppe further clarified the changes to the team's structure and risk management policies that he first articulated in March. Going forward, the fund will cap position size at 20% of assets. Furthermore, the team will formally review positions as they grow to 10% and 15% of assets. Recall that Valeant was 28.7% of the portfolio in June 2015.

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