Mr. Buffett fields a question about Sequoia Fund and its massive investment in Valeant Pharmaceuticals. (You can read our primer about this topic earlier in this live blog, at this link.)  Mr. Buffett starts by reminding the room that he is âthe fatherâ in a way of the mutual fund, in that he steered his early investors toÂ Ruane, Cunniff & Goldfarb Inc. when he shut down his investment partnership. That firm set up Sequoia to handle their money.  He also reminds the room that SequoiaâsÂ long term track record is still among the best in mutual-fund history, despite the recent struggles.  But he says the âunusually large positionâ it took in Valeant was a mistakeâthe result of Â the fund becomingÂ âoverly entranced with the business modelâ of the pharmaceutical giant. SomeÂ management of the fund has been replaced, he said. Heâs advised people privately to stay with the fund and withÂ Ruane Cunniff, and says the people who remain there are âvery smart, decent people.â  On Valeant, Mr. Buffett saysÂ âthe business model of Valeant was enormously flawed.â He notes that the companyÂ was âtouted to us,â and intermediaries wanted him to meet with the companyâs chief executive, Michael Pearson. (We referenced that in this item last night: âAckman to Buffett, Munger: Canât We Get Along.â)  The companyâs troubles illustrate a principle passed on to him by a friend. Mr. Buffett says: âIf youâre looking for a manager, find someone who is intelligent, energetic and has integrity. If he doesât have the last, make sure he lacks the first two.â  He and Mr. Munger have seen âpatterns that frequently come to a bad end, but look extremely good in the short run,â implying that Valeant falls into that camp.  Mr. Munger weighs in to say Sequoia, as âreconstituted,â is a reputable investment fund.  Then he lands on of the haymakers for which heâs famous:  âValeant, of course, was a sewer,â Mr. Munger says. âThose who created it deserve all the opprobrium that theyÂ got.â
Warren Buffett and shareholders in his Berkshire Hathaway Inc. are gathering this weekend for the companyâs latest annual meeting. We're covering the event from the first sip of Cherry Coke to the last bite of Seeâs candy.