Shares of Valeant Drop More Than 40% After Short Sellers Report

Pershing Square Capital logo next to Valeant - Corporate logosIt hasn't been a fun couple of weeks for Bill Ackman, CEO of hedge fund firm Pershing Square Capital Management.

Ackman, who has made a name for himself as an ultra-successful and ultra-confrontational hedge fund manager, revealed earlier today that his firm had purchased 2 million additional shares of the embattled Valeant Pharmaceuticals, which is down more than 50% since the late summer. Shares of Valeant Pharmaceuticals fell nearly 40% earlier today after Citron Research published a report in which they alleged that Valeant Pharmaceuticals was channel stuffing. According to CNBC, "Citron alleges that Valeant is using a network of specialty mail-order pharmacies that the company actually controls to prop up sales of its high-priced drugs and to keep patients and their insurance companies from switching to less costly generics".

Shares of the company fell nearly 40% intraday before recovering somewhat to close down 19%. A number of analysts published intraday notes in which they announced their continued support of the company, while Ackman revealed that his firm had purchased an additional 2 million shares of the company.


Pershing Square Capital Management is known for taking very big positions in companies and being very vocal about it. Ackman, for instance, has been in a long-running public feud with Herbalife for a number of years.

As of June 30th, 2015, Pershing Square Capital Management owned a total of 19,473,933 VRX shares for a total market value of approximately $4.3 billion. It's safe to assume that Pershing didn't sell any of those shares between June 30th and present day.

As of June 30th, shares of Valeant were trading at about $220 per share. So, at the height of today's intraday swoon, Pershing would have seen the value of their investment fall by over $2 billion from the end of June.

Pershing signalled that they were still committed to Valeant by purchasing another 2 million shares of the company earlier today.

In the end, however, even the coolest of hedge fund managers will likely have a hard time getting to sleep tonight.

Source: - Bill Ackman: I Bought 2M Shares of Valeant Today; I Believe in the Company

Filed under: General Knowledge

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