Robert Goldfarb
SKIPRuane, Cunniff & Goldfarb (Sequoia Fund)
Legendary Buffett-school value investor whose brilliant decades-long record was severely tarnished by the Valeant catastrophe; now retired with no current positions to follow.
Healthcare & Biotech Specialists
Score Breakdown
Investment Philosophy & Portfolio Style
Philosophy
Goldfarb is a classic Buffett/Graham-school value investor. The Sequoia Fund under his leadership sought to own a concentrated portfolio of 10-20 wonderful businesses at reasonable prices, with the intention of holding for decades. The philosophy emphasized: deep understanding of business economics, durable competitive advantages, exceptional management, and purchasing at prices that provided a margin of safety. Goldfarb believed in doing exhaustive primary research — visiting companies, talking to management, customers, and competitors. The approach was decidedly long-term and buy-and-hold, with extremely low portfolio turnover. This philosophy is essentially identical to Buffett's approach, which is natural given the firm's origins.
Portfolio Style
Highly concentrated — the Sequoia Fund typically held 10-25 positions, with the top 5-10 representing the vast majority of assets. Extremely low turnover — positions were held for 5-20+ years. Long-only, no leverage, no shorting. The fund was sector-agnostic but had significant exposure to healthcare, financials, and technology at various times. The portfolio famously had a massive concentration in Berkshire Hathaway for decades (30%+ at times). Under Goldfarb, the fund also built very large positions in companies like Valeant Pharmaceuticals (which became a disaster), TJX Companies, Rolls-Royce, and Fastenal. AUM of the Sequoia Fund was approximately $5-8 billion during Goldfarb's tenure as lead manager.
Background
Robert Goldfarb joined Ruane, Cunniff & Company in 1971 and became a named partner, with the firm eventually being renamed Ruane, Cunniff & Goldfarb. The firm managed the legendary Sequoia Fund, which was founded in 1970 by Bill Ruane at the recommendation of Warren Buffett, who suggested Ruane to his partnership investors when Buffett wound down his own partnership. Goldfarb served as co-manager and eventually lead portfolio manager of the Sequoia Fund after Ruane's death in 2005. Goldfarb is a classic Buffett-school value investor who believes in concentrated portfolios of high-quality businesses held for very long periods. He retired from active management around 2016-2018, after the Valeant Pharmaceuticals debacle severely damaged the fund's reputation and performance. The Sequoia Fund continues to operate but under different management. While described as having a 'healthcare focus' in some categorizations, Goldfarb was actually a generalist value investor whose healthcare exposure was largely through specific positions (most notably Valeant) rather than a sector specialization.
Track Record
The Sequoia Fund under Ruane and then Goldfarb was one of the best-performing mutual funds in history through approximately 2014. From 1970 to 2014, the fund dramatically outperformed the S&P 500, compounding at approximately 14-15% annualized vs. 10-11% for the index. However, the Valeant Pharmaceuticals disaster of 2015-2016 was catastrophic. The Sequoia Fund had accumulated approximately 30% of its portfolio in Valeant, and when the stock collapsed from ~$260 to below $10 due to accounting questions, pricing scandals, and business deterioration, the fund lost roughly 20-25% of its value in a matter of months. This represented a colossal risk management failure — the concentration in a single position with questionable accounting and aggressive business practices violated fundamental value investing principles. Several board members resigned in protest before the collapse. Goldfarb stepped down from active management in the aftermath. The pre-Valeant track record was outstanding; the Valeant period severely damages the overall assessment.
Notable Holdings
Historical major positions include: Berkshire Hathaway (held for decades, often 25-35% of fund), Valeant Pharmaceuticals (built to ~30% of fund, collapsed), TJX Companies, Fastenal, Rolls-Royce, MasterCard, Idexx Laboratories, Danaher, and various high-quality compounders. The portfolio was a who's who of quality businesses — until Valeant broke the mold and broke the fund.
Transparency & Integrity
Transparency(Score: 9/10)
High. As a registered mutual fund, the Sequoia Fund provided regular shareholder letters (which were excellent — thoughtful, honest, and well-written), quarterly holdings disclosures, and annual reports. The shareholder letters under Ruane and Goldfarb were considered among the best in the industry, comparable to Buffett's annual letters. This transparency makes the Valeant disaster all the more remarkable — it happened in full public view, and the fund's managers defended the position even as red flags mounted.
Integrity(Score: 6/10)
Complicated. On one hand, Goldfarb operated with the honest, long-term, shareholder-aligned philosophy that characterized the Ruane/Buffett school of investing for decades. The Sequoia Fund had low fees, genuine alignment of interests (managers invested alongside shareholders), and a culture of intellectual honesty — for most of its history. On the other hand, the Valeant debacle raises serious questions about judgment, stubbornness, and willingness to ignore red flags. Multiple board members warned about the Valeant concentration and resigned when management refused to reduce the position. This suggests Goldfarb became anchored to his thesis and ignored disconfirming evidence — a form of intellectual dishonesty even if not intentional. The fact that he stepped down afterward shows some accountability. No fraud or SEC issues, but the Valeant failure is a significant judgment/integrity mark.
Relevance to Us
High philosophical alignment but with critical cautionary lessons. Goldfarb's pre-Valeant approach — concentrated, long-term, quality-focused, low-turnover, no leverage — is almost exactly our philosophy. The Sequoia Fund's shareholder letters are worth reading for their analytical framework. However, the Valeant disaster is a perfect case study in exactly the risks our framework warns about: (1) over-concentration in a single position, (2) anchoring bias, (3) ignoring disconfirming evidence, (4) false floor (Valeant's assets turned out to be worth far less than the balance sheet suggested), (5) accounting fraud risk. Goldfarb is retired and no longer managing money, so there are no current positions to follow. His value is as a historical reference and cautionary tale, not as a current source of investment ideas.