December 15, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Bill Ackman, one of the largest shareholders of embattled Valeant Pharmaceuticals and a member of its board of directors, dumped a big chunk of company stock owned by his investment firm, Pershing Capital Management, the New York Business Journal reported Wednesday.
With the sell-off of about 3.5 million shares, Ackman’s firm now owns about a 7.8 percent stake in the company, down from about 9 percent, according to reports. Ackman and Pershing have held a large, but losing stake in Valeant. The Journal noted that Pershing has lost more than $2 billion on its investment in Valeant. In its filing with the Securities and Exchange Commission noting the sell-off, Valeant said it sold the shares to “generate a tax loss in 2016 for their investors,” according to the Journal.
Ackman’s move came on the day after three high-level executives quit the company. Rob Rosiello, the company’s former chief financial officer, and two executive vice presidents, Anne Whitaker and Ari Kellan, announced their intentions to leave.
As news hit of Ackman’s sell-off, shares of Valeant continued a year-long decline. Stocks fell from $14.14 per share to this morning’s open of $13.93. However, today the stock has continued to slide and is currently down more than 7 percent, trading at $13.14 per share. The stock fall is nothing new for Valeant. Over the course of 2016, the stock is down about 85 percent from $118.47 on Dec. 16. In August of 2015, the stock hit an all-time high of $263.70.
Joe Papa, Valeant’s chief executive officer, sought to quell the fears of investors, something he has had to do on several occasions. During a Wednesday BMO Capital Markets conference, Papa placed the blame where he thought it belonged—on the media. Alicia McElhaney, writing in The Street, did not provide any reasoning behind Papa’s finger-pointing, but said Papa touted the company’s moves to divest itself of core assets, something Ackman had pushed for earlier this year.
Earlier this year, Valeant identified about $8 billion worth of non-core assets. While that’s a good amount of money, Valeant has more than $30 billion in debt, in large part due to its string of acquisitions and sales of assets have been considered as an appropriate course of action by company leadership.
Valeant has seen its stock drop dramatically since 2015 after questions about possible accounting fraud related to the Valeant’s ties to the now shuttered specialty pharmacy company, Philidor Rx Services. Valeant has been under investigation by the U.S. attorney’s office in New York since last year following news of the Philidor accounting practices became known. In November, two former Valeant executives, Michael Pearson and Howard Schiller, were under investigation for their possible roles in the Philidor scandal.
