Bill Ackman: Shares Were Sold To "Generate a Tax Loss"

Valeant Pharmaceuticals International Inc. - Corporate logoInvestors in Valeant Pharmaceuticals International, Inc. had a rollercoaster of a year in 2015.

The company, which soared to a high of $263.81 this past summer, was brought back down to earth after allegations surfaced that it was perpetrating an "Enron-like fraud" on the general public. Shares of Valeant, which trade under the VRX symbol on the New York Stock Exchange, hit lows of less than $70 before bouncing back into the end of the year.

Valeant's staunchest ally over the past year has been Bill Ackman, who runs the Pershing Square Capital Management hedge fund. Ackman, who is not shy to express his opinions about a company, no matter how controversial these opinions may be (see Herbalife), was very active in defending Valeant during its darkest days. Not only was the company being scrutinized for its drug pricing practices, but it was also being accused of shadiness by a prominent short seller, Andrew Left. Left criticized the company's undisclosed ties to pharmacy partner Philador, which eventually led to Valeant cutting ties with the company earlier in the year.

Ackman, during the darkest days of the company's swan dive under $100, revealed that Pershing Square Capital Management had increased its position by 2 million shares. If Valeant was going down, Ackman seemed to be indicating, Pershing Square Capital Management and its investors would be going with it.


Things seemed to be stabilizing for Valeant Pharmaceuticals heading into the close of the year. Shares were well off of its lows, and day traders and the media had seemingly moved on.

The positive momentum was broken, however, after the company's Chairman and CEO, J. Michael Pearson, was admitted to hospital with severe pneumonia. Shares of Valeant tumbled on the news, worrying investors who were already on the edge due to a volatile 2015.

Investors are left to nervously fidget once again, as Ackman announced that Pershing Square Capital Management had trimmed its stake in the company by 5 million shares. The media is making quite a big deal out of this move, though it should be noted that Pershing Square Capital Management still owns 8.5% of the company heading into the new year. Ackman said that the 5 million shares were sold in order to "generate a tax loss" for the company.


Where shares of Valeant end 2016 is anyone's guess, though one thing is for sure - the next 12 months will almost certainly be extremely volatile.

Filed under: General Knowledge

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