Ackman Trims Stake in Valeant

Maybe having Hedge Fund Billionaire Bill Ackman in your corner isn't such a good thing after all. Valeant Pharmaceuticals' staunchest defender trimmed his firm's stake in the beleaguered drug company, citing tax reasons. In a regulatory filing, billionaire Bill Ackman's Pershing Square Capital Management said it sold some 5 million Valeant shares “to generate a tax loss” for investors. The hedge fund now owns 8.5% of Valeant's outstanding shares, down from close to 10% before the cutback. Valeant's woes have weighed on Ackman's returns. His publicly traded entity, Pershing Square Holdings, was down 19.7% as of Dec. 29, 2015. By contrast, Ackman boasted returns of 41% in 2014.

Valeant's shares have plunged nearly 30% during the past 12 months amid a series of setbacks that have raised questions about its business model, leading to scrutiny by lawmakers. Rather than invest in drug research, Valeant buys up other drug makers. The drug maker has also been known to dramatically raise the prices of the drugs it acquires. Perhaps the biggest blow came after short-seller Andrew Left of Citron Research criticized Valeant's undisclosed ties to pharmacy partner Philador, including a $100 million investment in the pharmacy, which sold Valeant drugs through the mail. Valeant cut ties with Philador in October.


Pharmaceuticals aren't the only area where Valeant competes. The company is a significant player in dermatology, OTC and skin care category, with brands such as CeraVe.