Published On: Tue, Mar 14th, 2017

Bill Ackman sells disastrous stake in Valeant at huge loss

Bill Ackman ’s portfolios have suffered the worst performance patch in his career which is also caused some investors to flee.

BILL ACKMAN screen shot

In dramatic step, finally, billionaire hedge fund Bill Ackman on Monday threw in the towel on Valeant pharmaceuticals, investment he made three years ago. In all, the loss totals nearly $4 billion, Forbes reported.

Not a word about what damages it caused to Ackman’s reputation. Ackman’s portfolios have suffered the worst performance patch in his career which is also caused some investors to flee.

Ackman’s Pershing Square Capital Management reported in its 2016 annual report a purchase of  Valeant stake at an average price of $196 a share. Yesterday, the hedge fund sold about 27 million remaining shares at an average price of roughly $11 each, CNBC reported, citing unidentified sources.

Pershing Square’s announcement sent Valeant shares down roughly 10% to $10.90 in after-hours trading.

“At its current market value, the Valeant position represented 1.5% to 3% of the various Pershing Square funds; however, the investment required a disproportionately large amount of time and resources,” the hedge fund said in a statement. “As a result, we elected to sell our investment and realize a large tax loss which will enable us to dedicate more time to our other portfolio companies and new investment opportunities.”

Bill Ackman said he won’t seek re-election to the drugmaker’s board.

“After Bill Ackman and Steve Fraidin joined the Valeant board in March 2016, they worked with their fellow directors to take important steps to stabilize Valeant and position it for the futur.” said in a statment.

Those steps included:

  • Paul Herendeen and GC Christina Ackermann;
  • Refreshing the board of directors with 10 new members;
  • Returning the company to a current and timely filing schedule with the SEC;
  • Receiving appropriate amendments and waivers under applicable credit agreements;
  • Announcing a strategy to sell non-core assets to improve the company’s balance sheet;
  • Paying down ~$2.7 billion of net debt with the sale of non-core assets and free cash flow generation; and
  • Last week, priced a $3.25 billion bond refinancing and covenant waiver package which extends maturities and reduces the company’s exposure to floating interest rates.

The company has said the examinations focus on its drug-pricing policies, as well as its former business ties to a specialty pharmacy that helped market Valeant’s medications to other pharmacies.



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