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William Ruane, philanthropist, Sequoia Fund manager; at 79

WASHINGTON -- William J. Ruane, one of Wall Street's most successful investment managers and a philanthropist with an abiding interest in education and mental health, died Tuesday at Memorial Sloan-Kettering Cancer Center in New York. He was 79.

He died of complications from lung cancer, according to David Poppe of Ruane, Cunniff & Goldfarb, of which Mr. Ruane was chairman. At the time of his death, he also was co-manager of the Sequoia Fund.

Mr. Ruane and partner Richard T. Cunniff founded their investment management firm in 1969 after raising $20 million from investors. Most of their customers came to them on the recommendation of Warren Buffett, Mr. Ruane's former classmate and a close friend.

The company's Sequoia Fund, a mutual fund that has substantially outperformed the Standard & Poor 500 index since its inception in 1970, has been so successful that it has been closed to new business since 1982.

A Chicago native, Mr. Ruane graduated from the University of Minnesota in 1945 with a degree in electrical engineering. He enlisted in the Navy immediately after graduating and was on his way to Japan when World War II ended.

In 1947, he joined General Electric Corp., where he learned that engineering was not for him. ''I'm a mechanical idiot," he told Forbes magazine.

He enrolled at Harvard Business School and found his calling when a professor urged his class to read the classic textbook ''Security Analysis: Principles and Techniques" (1940). Although he knew nothing about stocks, he was impressed with the approach authors Benjamin Graham and David Dodd took to financial analysis.

Mr. Ruane recalled interviewing with a Wall Street investment firm and being told that college graduates were paid $35 a week, while Harvard Business School graduates were paid $37.50. ''And there you have the value of a Harvard Business School degree in 1949," he remarked this year. ''Things have changed."

After receiving his master's degree in 1949, he went to work for Kidder Peabody, where he stayed for 20 years.

In 1950, Ruane and Buffett sat in on a class Benjamin Graham taught at Columbia University, where they learned that the quality of earnings was just as important as growth in earnings. Buffett bought Berkshire Hathaway in 1965 and recommended four years later that his partners invest in Ruane's new fund. Many of them did.

In 1999, Forbes noted that if an investor had placed $10,000 with the fund at its inception and had reinvested the dividends, he or she would have had $1.1 million that year.

Today, the Sequoia Fund manages more than $14 billion.

Long interested in urban education and mental health, in 1992 Mr. Ruane ''adopted" a block of East 118th Street, between Fifth Avenue and Lenox Avenue in Harlem.

Called the Carmel Hill Project, it was a ''comprehensive community initiative" that involved renovating buildings, bringing in health clinics and other community service programs, and providing scholarships to every child on the block so all could attend a Catholic school three blocks away.

He also funded an Accelerated Reader program for 26 New York public schools and for 19 schools in Monroe, La., as well as schools on reservations.

At the 2005 Sequoia Fund shareholders' meeting, Ruane offered two rules of investment, borrowed from his old friend Buffett: ''Rule No. 1: Don't lose money. Rule No. 2: Don't forget rule number one."

He leaves his wife, Joy of New York; four children, William Jr. of Cambridge, Mass., Elizabeth of Burlington, Vt., Thomas of Washington, Conn., and Paige of New York; a sister, Patricia Lowry of Maui, Hawaii; and four granddaughters.

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