William Ackman's Pershing Square trims stake in Valeant by selling 5 million shares

William Ackman's Pershing Square trims stake in Valeant by selling 5 million shares

A major change announced was made by William Ackman’s Pershing Square Capital Management LP that it has shed its stake in Valeant Pharmaceuticals International to 8.5% owing to tax planning reasons. The decision is said to be shocking as Ackman has rigorously defended his investment worth multimillion dollar in the company.

The announcement by Pershing Square came exactly after a month when the fund unveiled that it has increased its Valeant stake to 9.9%. The increased-stake decision was taken to derive advantage of the beaten-down market for the stock.

As per a regulatory filing, the find now owns 29.1 million shares that include 16.6 million common shares along with the 12.5 million shares underlying options. Pershing Square has sold the shares in order to generate a tax loss for investors in two of its funds, and this move would lower investors’ 2015 taxes.

Valeant came into limelight after it was found that the company has increased the prices of two cardiac-care drugs by 525% and 212%, after taking hold of the medicines in February. Later, Valeant said that it aims to not enter into deals that take advantage of underpricing and its revenue growth is driven by as much as sales volume as price increases.

The company has also faced scrutiny in the health-care industry because of its close ties with a mail-order pharmacy, which led patients to have higher-price drugs instead cost effective alternatives that are being preferred by insurers. Valeant has broken its ties with the company and formed its board committee.

Valeant is specialist in dermatology, eye health and neurology medications. The company has grown majorly by acquiring other drugs and drug companies and raising drug prices rather than through the traditional pharmaceutical-industry growth method of discovery new drugs through research and development. The company has posted revenue of $8.25 billion in 2014.

According to a report from the MarketBusinessNews, William Ackman’s hedge fund Pershing Square Capital Management sold approximately 5 million shares in the pharmaceutical giant Valeant International “to generate a tax loss for their investors”. In a recent regulatory filing Pershing said that its stake in Valeant is now equivalent to 8.5% of the company’s shares (or 29.1 million shares) valued at about $2.96 billion.

It may come as a surprise to some, especially given Ackman’s vocal support of drug company. At one point Ackman said that he would have bought more stock in Valeant if he had the funds.
The fund now beneficially owns 29.1 million shares, which include 16.6 million common shares, along with the 12.5 million shares underlying options, according to a regulatory filing. As of Thursday’s close at $101.65, the investment is valued at about $2.96 billion.

Pershing Square said it sold Valeant shares to generate a tax loss for investors in two of its funds. Selling shares and locking in a loss would allow investors to offset trading profits elsewhere in their portfolios and lower their 2015 taxes.A representative from Valeant wasn’t immediately available for comment, told the WSJ.

The MidSouthNewz notes that, Pershing Square Capital Management, LP recently disclosed that they own 8.5% of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) in a Schedule 13D/A disclosure that was filed with the Securities and Exchange Commission on Thursday, December 31st. The investor owns 29,091,122 shares of the stock valued at $2,957,112,551. The reporting parties listed on the disclosure included Pershing Square Capital Management, LP, PS Management GP, LLC and William A Ackman. The filing is available through Edgar at this link.