Domestic-Equity Managers of the Year Robert Goldfarb and David Poppe of Sequoia Fund
You can't point to one savvy move or big bet that clinched the award for Goldfarb and Poppe. Sequoia is rooted in decades of deep individual-company research and deft execution of a winning, time-tested investment formula. The managers look for companies with enduring competitive advantages, strong balance sheets, and quality management. They buy when valuations look compelling and hold for the long term. The fund's turnover regularly clocks in below 15%. Sound like a strategy from Warren Buffett's playbook? It is. Buffett has played a role in the fund's success by not only inspiring management's investment philosophy from the very beginning, but also by running Berkshire Hathaway (NYSE:BRK.A), one of Sequoia's largest holdings since 1990. Anyone could have bought Berkshire 20 years ago and held on, but very few have. It's far easier for scores of investors to play lip service and point to Buffett as a guiding light, but it has proven very difficult to emulate him with true investment success. The Sequoia team has done it.
Many of the fund's large positions and biggest winners in 2010-- TJX (NYSE:TJX);Idexx Laboratories(NASDAQ:IDXX), and O'Reilly Automotive (NASDAQ:ORLY)--have been held in the portfolio for more than five years. So 2010 was less about recent maneuvers or new picks panning out, and more about a compact, long-held portfolio firing on all cylinders.
The researchers behind Sequoia's success have demonstrated excellent stewardship, too. Until 2008, the fund had been closed to new investors for 25 years. That has kept the team focused on investing and away from the distractions of marketing the fund to new investors or absorbing new assets. Even today, the fund can be difficult to buy because it doesn't pay for distribution and therefore is not readily available on many popular brokerage platforms.
In the following interview, Karen Dolan, director of mutual fund analysis at Morningstar, tells CNBC why her firm chose the managers at Sequoia as the best of the best in the mutual fund space. And Sequoia's David Poppe and Robert Goldfarb share their strategy.
Check out the stock portfolio of firm here.