5-Star Sequoia Fund's Top Holding and Investment Strategy
Special to CNBC.com
The $4 billion Sequoia Fund, rated five stars by Morningstar, is being cautious and selective in where it takes positions, sticking with what it knows.
"We haven’t had the confidence to really jump in and make big investments in companies in the last few months," David Poppe, the fund's co-manager, told CNBC Thursday.
The portfolio currently has positions in 35 companies, its biggest being Valeant Pharmaceuticals. He said that unlike other pharma companies facing patent expirations, Valiant is more focused on acquisitions.
Valiant is "acquiring a lot of other drugs, sometimes even branded drugs that have lost their patent protection but there’s no generic equivalent that has hit the market," Poppe explained. Valiant is also expanding into emerging markets, including Poland and Brazil.
Valiant surplanted Berkshire Hathaway as the fund's largest holding after close to 20 years.
"We love Berkshire Hathaway," Poppe said. However, "I don’t think Berkshire is likely to compound at the kind of rates in the future that it did in the 1990s, in particular.”
Like Berkshire's Warren Buffett, Poppe prefers to invest in what he knows, which means a minimal focus on technology.
"I’d rather own beer or soda, where I know the brand name is likely to be good in 20 years, than something harder to analyze and more dynamic" like tech, Poppe said.
He added, "If you want to to outperform the market, you have to have a point of view and you have to concentrate on things that you know well and like."
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