Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is down 9% in Monday’s early after-market trade amid reports that billionaire hedge fund manager Bill Ackman has called it quits. If true, it ends a two-year relationship since Ackman bought his initial stake in VRX stock.
How painful? About a 95% loss on Ackman’s first bet.
Valeant Pharmaceuticals — a Quebec-based specialty pharma company that has its fingers in a number of fields, including eye health, dermatology and branded generics — reached all-time highs above $250 per share in summer 2015, just months after Ackman made his initial 5% stake.
The hammering of VRX stock began in October of that year, though, amid allegations from short seller Citron Research that Valeant was fraudulently pushing its products through a pharmaceutical distributorship called Philidor RX. The company also was knocked down amid outcry over aggressive price hikes on several of its drugs, including a lead poisoning drug.
All the while, debts have been piling up, and Valeant has been selling off assets to balance them out.
The episode has delivered Ackman some of his worst investment results ever.
Ackman’s Losses in VRX Stock
Ackman’s 5% stake — worth about $3.3 billion — was first reported in March 2015, the year after Ackman and Valeant tried to execute a hostile takeover of Allergan plc (NYSE:AGN).
In October 2015, when VRX stock was plunging amid Citron’s report, Ackman doubled down on his bet, buying another 2 million shares. Even when he trimmed down his stake in December to 8.5%, he said it was to “generate a tax loss.”
Ackman dove in once again sometime after Q4 2015 to increase his stake to 9% — that, in the face of a January letter in which he apologized to Pershing Square shareholders for not selling during the summer.
By May 2016, his tune had changed. Ackman told CNBC that he “of course” regretted his initial investment in VRX, and he then sold about 3.4 million shares, reported in a Dec. 12 filing.
Monday reportedly was the end of it, with Ackman dumping 27.2 million remaining shares of VRX at $11 each, sources told CNBC, and remaining on the board but declining re-election.