====== Bill Ruane ======
William J. Ruane (1925-2005) was a legendary American investor, a pioneer of the [[value investing]] philosophy, and the founder of the highly successful [[Sequoia Fund]]. A classmate and lifelong friend of [[Warren Buffett]] under the tutelage of [[Benjamin Graham]] at [[Columbia Business School]], Ruane embodied the core principles of buying wonderful businesses at sensible prices. His approach was defined by extraordinarily deep, fundamental research, a long-term holding period, and a fiercely independent spirit. When Buffett decided to close his investment partnership in 1969, he famously told his partners that if they were looking for another manager, the only person he would recommend was Bill Ruane. This ultimate vote of confidence launched Ruane's public career and cemented his status as one of the great investors of his generation, proving that a disciplined, research-intensive process could generate spectacular returns over many decades.
===== The Buffett Connection =====
The bond between Bill Ruane and Warren Buffett is one of the most celebrated relationships in investment history. They met in the early 1950s in Benjamin Graham’s famous investment class at Columbia, a crucible that forged their shared investment DNA. They weren't just classmates; they became close friends who constantly shared ideas and challenged each other's thinking for over 50 years.
The ultimate testament to their relationship came in 1969. As Buffett prepared to dissolve his wildly successful partnership, he faced a dilemma: his partners wanted to know where to invest their money next. In his final letter, Buffett wrote that he could not in good conscience recommend a successor, as he didn't know anyone whose motivations and methods he could fully endorse—with one exception. He told them, "//If you want to own a [[mutual fund]], but have me pick it, I’d go with Bill Ruane.//" This was no casual suggestion; it was the highest possible praise from the world's greatest investor, entrusting his own partners' capital to his friend's care.
===== The Sequoia Fund: A Legacy of Concentration =====
Acting on Buffett's recommendation, Ruane and his partner Rick Cunniff launched the Sequoia Fund in 1970 specifically to serve Buffett's former partners and other like-minded investors. For decades, the fund served as a masterclass in applying value principles in the real world.
==== A Concentrated Approach ====
Unlike most fund managers who preach wide [[diversification]], Ruane was a firm believer in [[concentration]]. His philosophy was simple: why put your 20th-best idea on the same footing as your best idea? The Sequoia Fund typically held only 10 to 15 stocks, with its top positions often accounting for a significant portion of the portfolio. This approach required immense conviction, which could only be born from exhaustive research. Ruane and his team would spend months, sometimes years, studying a company and its industry before investing, ensuring they operated well within their [[circle of competence]]. They weren't "renting" stocks; they were buying meaningful stakes in businesses they intended to own for a very long time.
==== Famous Investments ====
The fund's history is studded with legendary long-term holdings.
  * **[[Capital Cities/ABC]]:** Ruane was an early and significant investor, recognizing the brilliance of its CEO, Tom Murphy. The fund held the stock for decades, reaping enormous rewards as the company grew into a media powerhouse.
  * **[[American Express]]:** Much like Buffett's famous investment during the "Salad Oil Scandal," Ruane understood the enduring power of the company's brand and business model, making it a cornerstone of the portfolio.
  * **Outback Steakhouse:** This holding showcased Ruane's ability to find excellence in unconventional places, investing heavily in the restaurant chain when he saw its superior unit economics and management.
===== Key Investment Principles =====
Bill Ruane's career offers timeless lessons for any investor. His philosophy can be distilled into a few powerful ideas:
  - **Do the Work:** There are no shortcuts. Ruane's success was built on a foundation of intense, "gumshoe" research. He believed you had to know a company inside and out—its competitive advantages, management quality, and financial health—before you could justify an investment.
  - **Bet Big on Your Best Ideas:** When you find a truly exceptional opportunity, have the courage to make a meaningful investment. A portfolio of your 15 best ideas is far more likely to outperform a scattered collection of 100 mediocre ones.
  - **Patience is Your Superpower:** The stock market is noisy and irrational in the short term. Ruane ignored the daily chatter, focusing instead on the long-term value of the businesses he owned. True wealth is built by giving great companies the time to compound.
  - **Insist on a [[Margin of Safety]]:** The cornerstone of Graham's teaching, this was central to Ruane's process. No matter how wonderful the business, he would only buy at a price that offered a significant discount to its intrinsic value, providing both a cushion against error and the potential for greater returns.
===== Capipedia's Bottom Line =====
Bill Ruane is more than just a footnote in Warren Buffett's story; he is a giant of value investing in his own right. He took the theoretical principles of Benjamin Graham and translated them into a real-world, high-conviction strategy that stood the test of time. For ordinary investors, his legacy is a powerful reminder that you don't need to be a Wall Street insider to succeed. What you need is discipline, a commitment to deep research, and the patience to let your best ideas flourish. He proved that you can achieve extraordinary results by simply buying a few great things and holding on.