A Superinvestor of Graham and
Courtesy of Paige Ruane
By James Russell Kelly
In his 1984 address commemorating the 50th anniversary of Security Analysis by Benjamin Graham and David Dodd , Warren Buffett cited the performance records of seven extraordinary value investors . One of them was Bill Ruane , the founder of the Sequoia Fund . Buffett commented :
After getting out of Harvard Business School , [ Ruane ] went to Wall Street . Then he realized that he needed to get a real business education , so he came up to take Ben ’ s course at Columbia , where we met in 1951 . Bill ’ s record from 1951 to 1970 , working with relatively small sums , was far better than average . When I wound up the Buffett partnership , I asked Bill if he
Bill Ruane speaking to members of the Buffett Group on the Queen Elizabeth 2 cruise ship , 1983 . would set up a fund to handle all our partners , so he set up the Sequoia Fund . He set it up at a terrible time , just when I was quitting . He went right into the two-tier market and all the difficulties that made for comparative performance for value investors . I am happy to say that my partners , to an amazing degree , not only stayed with him but added money , with the happy result shown here . ( 1970 – 1984 compound annual return : Sequoia Fund + 17.2 %, S & P500 Index + 10 %)
Ruane ’ s success in managing the Sequoia Fund over many decades is legendary , but it is only a part of his life story .
William J . Ruane was born on October 24 , 1925 in Chicago and grew up in Oak Park , Illinois , a middle-class suburb just west of the city . His father , Thomas , and his mother , Martha Kraemer , were first-generation Americans . Their own parents had immigrated from Ireland and Germany , respectively . Thomas was very good at math . He was a highly productive banker at a local bank , but his advancement was blocked due to his Catholic faith . He quit and established a small express delivery company with three trucks serving local businesses on the south side of Chicago .
Bill ’ s younger sister , Pat , born in 1930 , remembers that their parents never argued with each other or scolded them , providing a very stable family environment . “ Bill was very close to his father , who always emphasized the importance of honesty .”
After graduating from St . Mel ’ s , a Christian Brothers high school in Chicago , Ruane enrolled in the University of Minnesota and graduated cum laude in 1945 with a degree in electrical engineering . He joined the US Navy and was deployed to Hawaii to participate in Operation Downfall , the planned invasion of Japan , which was cancelled when Japan surrendered in September 1945 . He remained on active duty until he was discharged in 1947 as
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