March 27 (Bloomberg) -- Richard Cunniff, vice chairman of the Sequoia Fund, which he founded with William Ruane and has outperformed market benchmarks for much of its 44-year history, has died. He was 91.
He died on March 23 at his home in Lloyd Harbor, New York, according to his son, Richard Cunniff Jr. The cause was complications from congestive heart failure.
Cunniff (pronounced cuh-NIFF) and Ruane, who died in 2005, studied under famed value investor Benjamin Graham, and many of their earliest clients were referred to them by Warren Buffett. The fund had $8.4 billion under management as of Dec. 31 and is known for taking big stakes in a few companies and holding the shares for many years.
“Rick was a rigorous stock analyst, patient teacher, and a true gentleman,” David Poppe, president of Manhattan-based Ruane, Cunniff & Goldfarb Inc., which manages Sequoia Fund, said yesterday in an e-mailed statement. “We’re going to miss him.”
At the end of 2013, according to the fund’s annual report, 52 percent of assets were invested in eight companies: Valeant Pharmaceuticals International Inc., Berkshire Hathaway Inc., TJX Cos., Fastenal Co., Rolls-Royce Holdings Plc, Precision Castparts Corp., MasterCard Inc. and Pirelli & C. SpA.
“We were orphans when everybody else was rushing after all of those so-called one-decision growth stocks, but we never did like the high fliers,’” Cunniff was quoted as saying in the New York Times in 1976, advocating the Sequoia Fund’s emphasis on companies’ financial strength and sound management. “I think that’s one of the reasons why our record is so good.”
Sequoia beat 99 percent of rival funds over the past three years, according to data compiled by Bloomberg. During the past quarter century, the fund has beaten the Standard & Poor’s 500 Index by almost 3 percentage points annually.
The fund welcomed new investors in 2008 after being closed for 26 years. By 2012, it was receiving $20 million a day in net deposits -- “inundated by cash” in the words of Robert Goldfarb, the fund’s president. To stem the flood, it stopped selling shares through intermediaries such as Charles Schwab Corp.
In December, Sequoia announced it would again close to new investors, “except for new accounts opened with us directly by existing shareholders of the Fund or existing clients of our firm, or members of their families.”
Cunniff reported to the company’s New York offices well into his 80s and more recently participated in board meetings by telephone, said his son, who is a vice president in the research department of Morgan Stanley in New York.
Cunniff’s daughter, Carley Cunniff, joined Ruane, Cunniff & Goldfarb in 1983, was named to the fund’s board in 1998 and rose to executive vice president. Diagnosed with breast cancer in 2001, she retired the following year and died in 2005, at 54.
Richard Trolan Cunniff was born on Jan. 20, 1923, in the Bronx, New York, one of three children of Frank Cunniff and the former Florence Trolan. He graduated high school in Rockville Centre on New York’s Long Island and attended Colgate University in Hamilton, New York, his studies interrupted by serving in the U.S. Navy during World War II.
He received his bachelor’s degree from Colgate in 1945 and a master’s in business administration from Harvard Business School in 1950. He joined Kidder, Peabody & Co. in New York and also worked at Keswick Corp., MacKay-Shields LLC, and Andresen & Co.
Today’s Ruane, Cunniff & Goldfarb began in 1969 as Ruane, Cunniff & Stires, with Sidney Stires as the third partner. The Sequoia Fund first sold shares to the public on July 15, 1970, and was not an overnight sensation.
“They went through some terrible times when they first started, in the 70s, but I think he’d say that after he got the hang of it, and their discipline began to show results, then he became increasingly confident in what they were doing,” Richard Cunniff Jr. said. “He was never fazed by the bad years, because he was never a short-term thinker.”
In addition to Richard Jr., survivors include his wife of almost 65 years, the former Marilyn P. Feld; his children, Peter Cunniff, Hilary Cunniff and Jeanne Foussard; his sister, Lesley Ketzel; and four grandchildren.
To contact the reporter on this story: Laurence Arnold in Washington at email@example.com
To contact the editors responsible for this story: Charles W. Stevens at firstname.lastname@example.org Steven Gittelson