Sequoia Fund, a mutual fund once renowned for its stock-picking prowess, has been placed under review by Morningstar after its massive bet on Valeant (VRX) cost it $1 billion this year. Sequoia’s head portfolio manager Robert Goldfarb on Morningstar’s list of “ultimate stock-pickers.”

The fund formerly held a “gold” rating from Morningstar, signifying the fund research firm’s highest recommendation. The review downgrades Sequoia to uncertain status, and could result in a lower rating ranging from “silver” to “negative.” Morningstar’s ratings are widely followed by investors and financial advisors.

Morningstar (MORN) faulted the fund for pouring 20% of its assets into Valeant, a concentrated position that climbed as high as 30% of the fund at the stock’s peak last year. Sequoia, together with its parent firm Ruane, Cuniff and Goldfarb, is the largest shareholder of Valeant, owning more than 10% of the company—an even bigger stake than Bill Ackman’s hedge fund Pershing Square.

Ruane’s overall portfolio, which owns the same stocks as the Sequoia Fund in roughly the same proportions, has lost even more than the mutual fund in Valeant, whose stock price has plunged 73% this year and more than 60% this week alone, amid scandals, disappointing sales, and default risk. The investment firm’s stake in the company, valued at about $3.6 billion at the end of 2015, is worth just $950 million today.

Ackman’s stake in Valeant, on the other hand, has fallen from $1.7 billion at the end of the year to $580 million now, though he purchased additional shares in the meantime. While Ackman’s hedge fund is down 26.4% this year, however, Ruane’s portfolio has lost 12.5% in 2016.

Morningstar put Sequoia Fund under review—essentially its form of probation—following the company’s earnings report, warning that “Valeant’s crash” could accelerate the fund’s bleeding, as investors are already yanking their money back. But noting the recent collapse in Valeant’s shares, Morningstar analyst Kevin McDevitt wrote that, “the fund’s once-exceptional trailing results are in tatters going back 10 years,” and “it does not seem to have taken any steps to mitigate the risks of such a large position.”

While many mutual funds promise to be diversified, prohibiting them putting more than 5% of their assets in a single stock or owning more than 10% of a company’s shares under securities laws, Sequoia Fund, notably, does not. Similar to hedge fund strategies, it prefers to concentrate its assets in a small number of companies because it believes that it can reap bigger returns “with less risk than a diversified basket of stocks chosen with less care,” according to fund documents.

“We’ve been criticized for allowing the holding to grow so large, but our feeling before the crisis erupted was that Valeant was executing well on its business model,” Goldfarb wrote in the fund’s annual report last month. “As the largest shareholder of Valeant, our own credibility as investors has been damaged by this saga.”

Ruane’s lack of diversification, however, has lately caused problems for the firm, which is facing at least two lawsuits filed this year by shareholders alleging that it breached its fiduciary duty by “recklessly” taking such an “enormous” stake in Valeant, according to the court filings.

Goldfarb pledged that the firm would “defend ourselves vigorously” against the first lawsuit, which they did not believe had merit, according to the fund’s annual report (released before the second lawsuit was filed). He also pointed out that two of Sequoia’s independent directors resigned in October over the Valeant scandal, which was only just beginning.

In that respect, Valeant’s slide may actually have a silver lining for Ruane: The drugmaker’s shares are now so much cheaper that they account for less than 7% of the firm’s $15.3 billion in assets.

A spokesperson for Ruane and Sequoia did not respond to a request for comment.

This article has been updated to more accurately describe Morningstar’s fund rating process.