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Tax savings make Bill Ackman cut his firm’s stake in Valeant


BILL ACKMAN screen shot


Citing tax reasons, Bill Ackman, the activist investor and a strong defender of Valeant Pharmaceuticals International, has reduced his firm’s stake in the drug company. In a regulatory filing, billionaire Bill Ackman’s Pershing Square Capital Management has sold around 5 million worth Valeant shares to ‘generate a tax loss’ for investors.

After making the cut, the hedge fund now has 8.5 percent of Valeant’s shares, down from around 10 percent before the cutback. The tax loss for investors has been created in two accounts and the stake has been maintained in two accounts, which would not receive the same tax advantage.

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The Internal Revenue Service has unveiled that annual losses on investment can be used to reduce investors’ total US taxes in some cases. Now, the company is the second-largest shareholder behind Ruane Cunniff & Goldfarb Inc, unveiled Bloomberg.

Ackman’s publicly traded entity, Pershing Square Holdings, was down 19.7 percent on December 29. Over the last 12 months, the company shares have declined 29.6 percent. During this period, the company has faced a number of setbacks that has led many critical problems with regard to its business model, causing scrutiny by lawmakers.

Valeant has a different working formula, as it does not invest in drug research and buys other drug makers. Experts said that even the drug makers also significantly raise the drug prices after the company is acquired.

The company started facing problems when short-seller Andrew Left of Citron Research criticized Valeant’s ties with pharmacy partner Philador and also mentioned about a $100 million worth investment in the pharmacy. The pharmacy used to sell Valeant drugs through the mail. In October, Valeant cut its ties with Philador.

Ackman has been a vocal supporter of Valeant and even in the toughest times of the company he has added 2 million shares to Pershing’s stake. The past year has been a tough year for hedge funds.

Bloomberg reported that, Bill Ackman, the activist investor who has been a staunch defender of Valeant Pharmaceuticals International Inc., trimmed his fund’s holdings of the stock for tax reasons.

Ackman’s Pershing Square Capital Management sold about 5 million shares of Valeant in order to create a tax loss for investors in two accounts, according to a regulatory filing on Thursday. The fund retained its stake in two accounts that wouldn’t get the same tax advantage. Annual losses on investments can be used to lower investors’ total U.S. taxes in some cases, according tothe Internal Revenue Service.

USA Today report said, Valeant Pharmaceuticals’ staunchest defender trimmed his firm’s stake in the beleaguered drug company, citing tax reasons. In a regulatory filing, billionaire Bill Ackman’s Pershing Square Capital Management said it sold some 5 million Valeant shares “to generate a tax loss” for investors. The hedge fund now owns 8.5 percent of Valeant’s outstanding shares, down from close to 10% before the cutback.

Valeant’s woes have weighed on Ackman’s returns. His publicly traded entity, Pershing Square Holdings, was down 19.7 percent as of December 29th.

According to the Reuters, Billionaire investor William Ackman said on Thursday he sold about 5 million shares in drug company Valeant International in order to generate a tax loss as investors in his Pershing Square Capital Management face the biggest loss in the company’s history.

Ackman’s hedge fund now owns 29.1 million shares in Valeant, or 8.5 percent of the company, down from 34.1 million shares, or 9.9 percent, according to a regulatory filing made after the market closed on Thursday, the last trading day of 2015.


This article was first published at Northern Californian,  by Keira Cook



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