Ackman Sells Entire Valeant Stake, Takes Huge Loss

Bloomberg News              Bill Ackman chief executive officer of Pershing Square Capital Management LP

The East Coast storm didn't stop shares of Valeant Pharmaceuticals International (VRX) from tanking Tuesday, the day after billionaire hedge fund manager Bill Ackman dumped his massive stake in the embattled drugmaker.

Shares of Valeant Pharmaceuticals International plunged about 13 per cent to a new low in pre-market trading this morning following the departure of one of its major investors.

Ackman now sits on Valeant's board, along with Pershing Square's vice-chairman, Steve Fraidin. Finally, Rodman & Renshaw reiterated a "neutral" rating and issued a $17.00 price objective (down from $23.00) on shares of Valeant Pharmaceuticals Intl in a research report on Monday, February 27th.

According to Bloomberg, Valeant's investment has been one of the worst decisions of Ackman, losing almost $4 million.


Taking a longer term look at where the stock has been and where it's headed, we note that now the stock has traded in the range of $10.5000 - 53.9000 over the past 52-weeks. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. The stock was trading north of $250 a share during mid-2015. Precise figures are hard to come by, but public filings suggest that Ackman's Pershing Square Capital Management may have lost $2.8 billion just on the Valeant shares it owned at the end of 2016, with overall losses likely to be much higher. In most recent quarter, LT Debt/Equity ratio was listed at 9.47 and Total Debt/Equity ratio was noted at 9.47.

Valeant, which technically is based in Canada but operates from headquarters in Bridgewater, New Jersey, ousted Michael Pearson, the CEO responsible for the price-hiking strategy, early previous year. Valeant is now trying to refinance its debt, which seems to have spooked investors even more.

Still, investors haven't been buying tales of the "new Valeant". Several funds began shorting stock, citing unclear business models and lack of transparency about earnings. The Return on Assets stands at -5.2%, Return on Equity shows -52.7% and Return on Investment value is -1.6%. In dramatic contrast, the fund dumped the roughly 27 million remaining shares at an average price of roughly $11 each, CNBC reported, citing unidentified sources. Laurion Capital Management LP raised its stake in shares of Valeant Pharmaceuticals Intl by 0.3% in the second quarter. Ackman later called Valeant-the worst-performing stock he says he ever owned-a "very big mistake". The business's revenue for the quarter was down 12.9% on a year-over-year basis.

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