U.S. stocks are lower in late morning trading, with theS&P 500and theDow Jones Industrial Average (DJINDICES: $INDU)down 0.46% and 0.37%, respectively, at 11:30 a.m. ET. Shares of Valeant Pharmaceuticals International Incdown 4.76%, are underperforming the broad market and the healthcare sector.
Valeant Pharmaceuticals announced on Monday that CEO J. Michael Pearson would step down as soon as his replacement is found. In addition, the board has requested that former chief financial officer Howard Schiller resign his director's seat -- which he has refused to do.
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Yesterday, the Valeant debacle -- from its high in August, the company's market value has fallen by roughly $80 billion -- claimed another head: that of Bob Goldfarb, co-manager of the Sequoia Fund and chief executive of the once-venerable money management company Ruane, Cunniff & Goldfarb.
This is the same company Warren Buffett recommended to his investors when he made plans in 1969 to wind up the Buffett Partnership. The company had recently been formed and was then known as Ruane, Cunniff & Stires, with its address at 85 Broad Street in lower Manhattan (Goldman Sachs' global headquarters until 2009).
Last week, influential fund research house Morningstar placed the Sequoia Fund's rating under review (it is currently rated three stars out of a possible five). Justifying this step, Morningstar analyst Kevin McDevitt wrote (my emphasis):
Ruane, Cunniff's client letter announcing Goldfarb's departure echoes Morningstar's criticism (my emphasis):
Bob Goldfarb joined Ruane, Cunniff in 1971, and his name was added to the door in 2004. What a disastrous way to cap what had been a previously illustrious investing career! Last October, Goldfarb was named by Forbes as one of the men who made a fortune off of America's most controversial stock.
Another one of the men Forbes identified was high-profile hedge fund manager Bill Ackman. Ackman joined Valeant's board this week in an effort to avoid following Goldfarb's as one of the men whose investing reputation was destroyed by America's most controversial stock.
The article The Valeant Debacle Claims Another Head originally appeared on Fool.com.
Alex Dumortier, CFA, has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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