Is this the year of the
Valeant Pharmaceuticals International turnaround? Will the
embattled drugmaker’s largest investors finally be
rewarded for their patience? It’s starting to look
like a possibility. On Tuesday, Valeant saw its stock surge 7
percent, closing at $16.42, in the wake of announcements that
it’s selling several assets for more than $2
billion. Valeant said it will use the proceeds to permanently
repay term loan debt. On Tuesday the company revealed that it
would sell its AcneFree, AMBI, and CeraVe skincare brands to
L’Oréal; the day before it said it would
unload its equity interests in Dendreon Pharmaceuticals to
Sanpower Group Co., a privately owned conglomerate in China.
Shares of Valeant are now up nearly 15 percent for the year
after dropping about 84 percent in 2016. At the end of the
third quarter of last year, its three biggest shareholders were
Pershing Square Capital Management,
Paulson & Co., and
ValueAct Capital Management.
PointState Capital was the fifth-largest shareholder.
Shares of activist favorite Chipotle Mexican Grill jumped
almost 5 percent on Tuesday, to close at $414.48, after the
casual Mexican dining chain reported that same-store sales
climbed 14.7 percent in December. This could be a signal that
customers are finally returning to the embattled company
following its food poisoning problems. Same-store sales had
declined by 1.4 percent in November and 20.2 percent in
October. In late October, Pershing Square Capital Management
bought more than 2.3 million shares of Chipotle for about $407
apiece, boosting the activist hedge fund firm’s
stake to 9.9 percent. In December the chain agreed to name four
new members to its board of directors as part of a compromise
agreement with Pershing Square.
Lousy performance has consequences, a lesson that employees
at Odey Asset Management are learning painfully. One week after
Crispin Odey’s main fund finished 2016 down 49.5
percent, the London-based firm has begun
firing staff to save money, according to the
Times. "We are saying goodbye to some of our people,"
Odey told the paper. "As always, we look to manage our costs."
Odey now manages about $8 billion. Although the firm correctly
predicted the Brexit vote, it got China wrong. "We
didn’t anticipate that the Chinese would reflate
like they did last year," Odey reportedly said.
The average hedge fund gained 5.34 percent last year,
according to eVestment, a sharp rebound from the 0.72 percent
loss for 2015. "All major hedge fund segments produced positive
returns in 2016," the hedge fund scorekeeper says in a new
report. Energy was the top strategy, gaining 11.5 percent in
2016 after losing 7.82 percent the previous year. Event-driven
and activist hedge funds posted an average gain of 10.43
percent, making them the second-best-performing sector.
Drilling down geographically, Brazil-focused hedge funds surged
33.29 percent. However, they came up short of their high-water
mark after losing 31.23 percent in 2015.