Ackman’s Pershing Square sells Valeant stake, takes $3 billion loss
BOSTON: Billionaire investor William Ackman walked away from Valeant Pharmaceuticals International Inc on Monday with a loss of more than $3 billion as he sold his entire stake in the struggling drug company after trying to rescue it for some 18 months.
The abrupt and unexpected move by the powerful activist investor sent Valeant shares tumbling almost 10 per cent in after-hours trading. They have lost 95 per cent of their value since mid2015.
For Ackman, it marked a dramatic climbdown from his vocal support of the company, but should help soothe his own investors who had begun to show signs of concern about mounting losses in his portfolio.
“We elected to sell our investment and realise a large tax loss which will enable us to dedicate more time to our other portfolio companies and new investment opportunities,” Ackman said in a statement. Ackman’s Pershing Square Capital Management became one of Valeant’s biggest investors in 2015 when it sunk some $3.2 billion into the company. At its peak the Valeant stake was worth roughly $4 billion.
Pershing Square said on Monday the Valeant position, at its current market value, represented 1.5 per cent to 3 per cent of its various funds.
Already one of the hedge fund industry’s most vocal investors, Ackman turned himself into Valeant’s biggest cheerleader and fixer, even as the stock price plunged amid US regulators’ probe of Valeant’s pricing policies and problems at its speciality pharmacy unit, Philidor. After securing a board seat, Ackman replaced the chief executive, overhauled the board of directors and made some asset sales.
But the biggest move — trying to sell Salix, the company’s gastro-intestinal division, to Japanese company Takeda — eluded Ackman after advanced negotiations failed to lead to a sale.
He sold Pershing’s 18.1 million shares of Valeant on Monday, plus about 8.8 million under his own name, together representing almost 8 per cent of Valeant overall, according to Reuters data.
Ackman’s fund bought into Valeant when the stock was trading near $190 a share and he watched it surge to $260 a share during the summer of 2015. But regulatory scrutiny and other concerns caused the stock price to sharply tumble after August 2015.