Sequoia benefited greatly from two transformative acquisitions announced in 2013: Valeant’s purchase of Bausch & Lomb and Advance Auto Parts’ purchase of General Parts International. Both deals were game changers which will significantly increase these two companies’ earnings beginning in 2014. While we’ve long been partial to companies that can grow organically, Sequoia’s returns have been boosted considerably by companies that may have limited organic growth opportunities but have done smart serial acquisitions, such as Valeant Pharmaceuticals and Berkshire Hathaway. Precision Castparts has been another serial acquirer that has created great value for shareholders.
We take considerable pride in our ownership of a fine collection of businesses and are pleased to report that of our top 10 holdings at year-end, eight outperformed the S&P Index and seven delivered a total shareholder return of at least 42%. Our top performing stock for the year was also our largest holding, Valeant Pharmaceuticals. It nearly doubled in 2013, rising 96%. At year-end, Valeant constituted 16.5% of the value of the Fund.