The Morning Brief: Pershing Square’s Ackman Dumps Valeant Stake

March 14, 2017   Stephen Taub


The Pershing Square founder sells off his entire position in the embattled drug maker.

Monday was a major day of reckoning for Pershing Square Capital Management’s Bill Ackman. The high-profile activist investor finally threw in the towel on his ill-fated, performance-draining investment in embattled drug maker Valeant Pharmaceuticals International, selling his entire stake. In a press release, Pershing Square also said Ackman and vice chairman Steve Fraidin will not stand for re-election to the board of directors at the company’s upcoming annual meeting. Valeant currently accounts for 1.5 percent to 3 percent of the various Pershing Square funds, the firm said. "However, the investment required a disproportionately large amount of time and resources," it added in its announcement.

Pershing Square, of course, will realize a large tax loss from the sale. At year-end, Pershing Square was the third-largest Valeant shareholder, with more than 18.1 million shares. Paulson & Co. was the second-largest shareholder, while ValueAct Capital was the fourth-largest shareholder. The stock closed at $12.11 on Monday, down a little more than 1 percent. It is down nearly 17 percent this year alone after dropping more than 80 percent last year. Ackman has lost $4 billion on the investment. After the closing bell yesterday, Ackman sold 27.2 million shares at $11 a share, according to published reports

Meanwhile, on the same day Ackman suffered a setback on another one of his high profile investments. Carl Icahn disclosed he bought more than 372,000 shares of Herbalife on Friday for $51.35 per share. As a result, Icahn’s investment vehicles collectively control 24.57 percent of the total number of outstanding shares of the controversial multi-level marketer of nutrition and health-related products. Icahn purchased the stock when it dropped to just above its 52-week low.

Of course, Pershing Square famously has a huge negative bet on Herbalife’s stock, asserting that the company is a Ponzi scheme. And sure enough, the shares surged 2.7 percent on the news of Icahn’s purchase, closing Monday at $53.68. This is also down from a recent high of $61.73 on February 15.

Pershing Square Holdings was down 1.5 percent for the year through March 7.

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Separately, Icahn disclosed he raised his stake in truck maker Navistar to more than 17 percent. The stock rose 1.8 percent on the news, closing at $26.46. At year-end, Icahn was already the largest shareholder.

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Adage Capital Management boosted its stake in Fluidigm to 1.546 million shares, or 5.29 percent of the maker of biological research equipment. The investment is passive.

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Sandell Asset Management filed an updated 13D filing on Bob Evans Farms. It said it owned 1.263 million shares or so of the restaurant chain, or 6.4 percent of the total outstanding, as of March 9. This is down from the 8.1 percent it reported owning in early December. However, the activist hedge fund disclosed on February 24 in its quarterly 13F filing that it owned the same 1.263 million-share stake in the company as of year-end. Turns out the new filing was made to show it no longer holds stock options that it had also owned at year-end.

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Caxton Associates founder Bruce Kovner is looking to sell his Caribbean property on the island of St. Barthélemy for $67 million, according to the Wall Street Journal. The property resides on 7.5 acres. Macro pioneer Kovner, who retired at the end of 2011, recently had a home built in Florida, according to the report.


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