Sequoia Fund closing to new investors...again

TheShadow

http://www.sec.gov/Archives/edgar/data/89043/000091957413006888/d1435843_497.htm

497 1 d1435843_497.htm

SEQUOIA FUND, INC.


Supplement dated December 9, 2013
to the Prospectus dated May 1, 2013


The following replaces the two paragraphs under "SEQUOIA FUND, INC. – Principal Investment Strategies" in the Fund's Prospectus:


The Fund's investment objective is long-term growth of capital. In pursuing this objective the Fund focuses on investing in equity securities that it believes are undervalued at the time of purchase and have the potential for growth. A guiding principle is the consideration of equity securities, such as common stock, as units of ownership of a business and the purchase of them when the price appears low in relation to the value of the total enterprise. No weight is given to technical stock market studies. The balance sheet and earnings history and prospects of each company are extensively studied to appraise fundamental value. The Fund normally invests in equity securities of U.S. and non-U.S. companies. The Fund may invest in securities of issuers with any market capitalization. The Fund typically sells the equity security of a company when the company shows deteriorating fundamentals, its earnings progress falls short of the investment adviser's expectations or its valuation appears excessive relative to its expected future earnings.


Ordinarily, the Fund's portfolio is invested in equity securities of U.S. and non-U.S. companies. The Fund is not required, however, to be fully invested in equity securities and, in fact, usually maintains a portion of its total assets in cash and securities generally considered to be cash equivalents, including, but not limited to, short-term U.S. Government securities. Depending upon market conditions, cash reserves may be a significant percentage of the Fund's net assets. The Fund usually invests its cash reserves principally in U.S. Government securities.


The following replaces the first paragraph under each of "SEQUOIA FUND, INC. – Purchase and Sale of Fund Shares" and "PURCHASE AND SALE OF SHARES – How to Buy Shares" in the Fund's Prospectus:


Effective as of the close of business on December 10, 2013, the Fund will be closed to new investors (except new investors investing directly with the Fund who are employees or clients of the Adviser, and members of their families). Subject to its right to reject any order to purchase Fund shares or to withdraw the offering of Fund shares at any time, the Fund will remain open to existing shareholders, and will continue to reinvest dividends and capital gains distributions for the accounts of existing shareholders who have elected those options. De minimis transfers of shares held by an existing shareholder (e.g., one share) to any new investor will not be permitted. When deemed to be in the Fund's best interests, the Fund reserves the right in appropriate cases to extend the offering of the Fund's shares to other persons, to restrict sales further, or to withdraw the offering altogether, all without notice.


* * * *
YOU SHOULD RETAIN THIS SUPPLEMENT WITH YOUR PROSPECTUS
FOR FUTURE REFERENCE.

TheShadow

Letter from Sequoia Fund management on their web site:

http://www.sequoiafund.com/images/sequoia 2 Dec 13.pdf

jerry

As a shareholder I am not that unhappy but not allowing transfers of one share is potentiallya little inconvenient. I think in general funds that demonstrate a willingness to close their funds are obviously thinking about protecting current shareholders. The last time the fund closed it was for a period of over 25 years .It reopend partly because old shareholders were dying and the market looked low in 2008 (though the fund actually reopened a littlle early (spring of 08. I wonder how long this closing will be for

Charles

Bummer.

May not see it open again for years.

TheShadow

Reply to @jerry:

I am a shareholder also since 2008. There was a restriction effective July 1, 2010, which states:

"...The following paragraph is added under the section "GENERAL INFORMATION." The following policy will be implemented by the Fund after July 1, 2010:

Due to the relatively high cost to the Fund of maintaining low balance accounts, the Fund requests that you maintain an account balance of more than $1,000. If your account balance is $1,000 or less for 90 days or longer, the Fund reserves the right to redeem the shares in your account at their current NAV on the redemption date after giving you 60 days notice to increase the balance. The redemption of shares could have tax consequences for you."

I believe the above paragraph was put into place to prevent one share trading/gifting.

With the prompt closing and inability to purchase through third party financial intermediaries, potential investors will have a tough time buying into the fund before the close of the market on December 10.

STB65

Suggests one manager group thinks the markets they follow are fully valued. (Guess that's really a different discussion thread.)

MourningStars

^ Agree STB65. Don't know if some of the managers think we are fully valued or have just lost a " margin of safety. (Humorous concept to think there is a margin of safety in equity markets.) At any rate, we are seeing some international large, USA large growth , and USA large value funds with great track records begin to close/limit investment.

MikeM

I didn't know it was open. I thought they closed it back in 2010-2011 time frame.

AndyJ

Mike, they did close it then to new investment through third parties, but you could still open a new individual investor account directly with Sequoia.

Ted

Reply to @TheShadow: M*'s Slant.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=622386