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Morningstar Analyst Rating 08-25-15
Œ
Morningstar Pillars
Process
Performance
People
Parent
Price ¶
Positive
Positive
Positive
Positive
Neutral
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive § Negative ¶ Neutral
NAV 258.24 235.00 222.92 168.31 145.50 129.29 109.90 95.27 139.12 152.75 155.45 154.27
Total Return % 10.96 7.55 34.58 15.68 13.19 19.50 15.38 -27.03 8.40 8.34 7.78 4.66
+/-S&P 500 13.84 -6.14 2.19 -0.32 11.08 4.44 -11.08 9.97 2.91 -7.45 2.87 -6.22
+/-Russ 1000Gr 15.79 -5.50 1.10 0.42 10.55 2.79 -21.83 11.41 -3.41 -0.73 2.52 -1.64
Income Return % 0.00 0.00 0.00 0.00 0.00 0.29 0.02 0.31 0.31 0.00 0.00 0.00
Capital Return % 10.96 7.55 34.58 15.68 13.19 19.21 15.36 -27.34 8.09 8.34 7.78 4.66
Total Rtn % Rank Cat 1 78 42 42 1 7 97 3 25 97 24 99
Income $ 0.00 0.00 0.00 0.00 0.00 0.31 0.02 0.42 0.45 0.00 0.00 0.00
Capital Gains $ 2.53 4.54 3.40 0.00 0.82 1.65 0.00 6.72 27.12 15.60 10.64 0.21
Expense Ratio % . 1.00 1.00 1.00 1.00 1.00 1.01 1.00 1.00 1.00 1.00 1.00
Income Ratio % . -0.26 -0.37 -0.26 -0.34 0.00 0.01 0.30 0.30 -0.50 -0.50 -0.40
Turnover Rate % . 8 2 5 3 23 15 12 13 14 8 6
Net Assets $mil 8,816 8,070 8,037 5,828 4,895 3,511 2,868 2,486 3,513 3,600 3,573 .
Performance 08-31-15
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2011
2012
2013
2014
2015
10.44 1.06 -9.92 12.58 13.19
10.76 -4.95 6.48 3.20 15.68
10.77 3.50 7.60 9.09 34.58
1.78 -0.86 -0.65 7.28 7.55
7.67 1.98 . . .
Trailing Total +/- +/- Russ %Rank Growth of
Return% S&P 500 1000Gr Cat $10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
-2.15 3.77 6.00 6 9,785
2.64 7.96 8.92 1 10,264
19.13 18.65 14.91 1 11,913
19.38 5.07 4.23 3 17,014
19.30 3.43 4.64 4 24,166
10.53 3.38 2.67 3 27,215
9.88 6.12 . 1 41,094
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
18.95 2 0.36 14
18.95 2 0.29 16
9.75 3 0.71 57
Potential Capital Gain Exposure: 63% of assets
Rating and Risk
Time Load-Adj Morningstar Morningstar Morningstar
Period Return % Rtn vs Cat Risk vs Cat Risk-Adj Rating
1 Yr 19.13
3 Yr 19.38 High Avg
5 Yr 19.30 High Low
10 Yr 10.53 High Low
Incept 14.56
Other Measures Standard Index Best Fit Index
S&P 500 R3000 Growth
Alpha 6.4 5.6
Beta 0.86 0.86
R-Squared 65 71
Standard Deviation 10.19
Mean 19.38
Sharpe Ratio 1.80
Morningstar’s Take by Kevin McDevitt, CFA 08-25-15
The Sequoia team’s faith in its top holding has been
richly rewarded. Recall that Valeant Pharmaceuticals’
shares VRX, which claimed 26% of the March 2015
portfolio, struggled through the first seven months of
2014 as the company waged a high-profile takeover
battle for Allergan AGN, which it eventually lost. The
market believed that Valeant would not be able to
grow at an attractive rate without Allergan. But
managers Bob Goldfarb and David Poppe contended
that the company still enjoyed good organic growth
prospects. The market has come around to their
perspective, more than doubling the share price during
the 12 months through July 2015.
Given its position size, Valeant’s revival has had an
outsized impact on the fund’s results. After muddling
along for the prior three years, it has gained 29.5%
annualized through July 2015, which is nearly triple the
S&P 500’s 11.2% return. The fund has traditionally
lagged its benchmark in the latter stages of a bull
market, but Valeant’s surge has broken that trend. The
fund has also benefitted from Berkshire Hathaway’s
BRK.B recently announced acquisition of top-10
holding Precision Castparts PCP.
But having 26% of assets in one company creates
significant stock-specific risk. It’s the fund’s largest
single position since Berkshire, which is still 11.4% of
assets, and claimed 28.7% of the portfolio in
December 2006. But Valeant arguably carries more
risk than Berkshire. As a conglomerate, Berkshire was
diversified across a number of industries and
maintained a stronger balance sheet. Valeant is
focused on pharmaceuticals and has a highly
leveraged balance sheet with a debt/capital ratio of
82.5%.
Goldfarb and Poppe are comfortable, though, with
both Valeant’s balance sheet and valuation. They
believe that synergies and cost savings within recent
acquisitions and strong growth prospects make the
balance sheet stronger than it may appear while
keeping the shares reasonably priced. Their ability to
see and capitalize on such developments helps the
fund retain a Morningstar Analyst Rating of Gold.
Address: Sequoia Fund Inc
New York, NY 10153-4798
800-686-6884
Web Address:
Inception: 07-15-70
Advisor: Ruane, Cunniff & Goldfarb Inc
Subadvisor: None
NTF Plans: N/A
Minimum Purchase: Closed Add: . IRA: .
Min Auto Inv Plan: Closed Add: .
Sales Fees: No-load
Management Fee: 1.00%
Actual Fees: Mgt:1.00% Dist: .
Expense Projections: 3Yr:$328 5Yr:$569 10Yr:$1259
Income Distribution: Annually
Data through August 31, 2015
Sequoia Ticker Status Yield Total Assets Mstar Category
SEQUX Closed 0.0% $9,318 mil Large Growth
97% 82% 84% 77% 74% 84% 82% 87% 87%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 08-15
Historical Profile
Return
Risk
Rating
High
Below Avg
Highest
Investment Style
Equity
Stock %
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
S&P 500
Performance Quartile
(within Category)
History
10.0
14.0
18.0
22.8
26.8
Portfolio Analysis 06-30-15
Share change since 03-15 Total Stocks:42 Sector PE Tot Ret% % Assets
Valeant Pharmaceuticals Hlth care 106.4 79.95 26.01
TJX Companies Inc Cnsmr Cyc 21.5 . 7.91
Berkshire Hathaway Inc C Finan Svs 17.3 -5.31 7.16
Berkshire Hathaway Inc C Finan Svs 17.3 -4.94 4.21
Fastenal Co Industrl 23.8 -10.22 4.19
O’Reilly Automotive Inc Cnsmr Cyc 30.9 24.76 4.14
MasterCard Inc Class A Finan Svs 29.9 13.60 2.98
Precision Castparts Corp Industrl 18.1 -19.06 2.93
IDEXX Laboratories Inc Hlth care 38.8 -1.90 2.82
Mohawk Industries Inc Cnsmr Cyc 31.3 29.76 2.46
Rolls-Royce Holdings PLC Industrl . -4.98 1.98
Sirona Dental Systems In Hlth care 33.1 18.78 1.31
Waters Corp Hlth care 24.7 18.43 1.21
Google Inc Class A Technology 32.7 23.89 1.04
Constellation Software I Technology 68.5 49.46 1.03
Google Inc Class C Capit Technology 30.8 17.77 1.03
Perrigo Co PLC Hlth care 129.9 15.13 1.01
Novozymes A/S B Hlth care 43.9 25.29 0.98
Praxair Inc Basic Mat 22.2 -10.80 0.96
Goldman Sachs Group Inc Finan Svs 10.8 6.44 0.94
Current Investment Style
Market Cap %
Giant 56.5
Large 22.3
Mid 19.8
Small 1.4
Micro 0.0
Avg $mil:
47,820
Value Blnd Growth
Large Mid Small
Value Measures Rel Category
Price/Earnings
Price/Book
Price/Sales
Price/Cash Flow
Dividend Yield %
25.72
3.80
2.53
16.19
0.62
1.44
1.32
1.40
1.62
0.47
Growth Measures % Rel Category
Long-Term Erngs
Book Value
Sales
Cash Flow
Historical Erngs
10.68
10.70
11.29
19.29
11.29
0.79
1.04
1.41
1.49
0.51
Profitability % Rel Category
Return on Equity
Return on Assets
Net Margin
23.60
8.30
12.65
1.13
0.85
0.90
Sector
Weightings
% of
Stocks
Rel
S&P 500 High
3 Year
Low
Cyclical 38.70 .
BasicMat 2.02 . 4 2
CnsmrCyc17.79 . 25 18
FinanSvs 18.89 . 21 19
Real Est 0.00 . . .
Sensitive 18.79 .
CommSrvs 0.00 . . .
Energy 0.07 . 3 0
Industrl 13.55 . 19 14
Technlgy 5.17 . 7 5
Defensive42.52 .
CnsmrDef 0.93 . 1 0
Hlthcare 41.59 . 39 23
Utilities 0.00 . . .
h
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u
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p
a
k
s
d
f
Composition - Net
(% of Stock)
Cash 15.5
Stocks 84.5
Bonds 0.0
Other 0.0
Foreign 41.1
© 2015Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor
timely. Pastperformance is no guarantee of future results.Access updated reportsat Toorder reprints, call312-696-6100. mfb.morningstar.com. Mutual Funds ß® EQ