Pershing Square Reveals Size of Valeant Investment ~ market folly

Wednesday, March 25, 2015

Pershing Square Reveals Size of Valeant Investment

Bill Ackman's hedge fund firm Pershing Square Capital Management has filed a 13D with the SEC regarding shares of Valeant Pharmaceuticals (VRX).  Per the filing, Pershing now owns 5.7% of the company with over 19.47 million shares.  The position was assembled via buying common stock and selling put options between February 9th and March 17th.

This is a brand new position for the hedge fund and the filing was made due to activity on March 17th.  We highlighted yesterday how Pershing Square would be participating in VRX's latest offering.  Their ownership percentage above is based on the post-offering amount of shares outstanding.  You can view all of Pershing's recent VRX-related trading activity here.

Based on the number of shares owned, Pershing would be the second largest holder of VRX, behind Ruane Cunniff & Goldfarb (Sequoia Fund) and would hold just slightly more shares than Jeff Ubben's ValueAct Capital.

Pershing's 13D filing also contained the following statement under 'purpose of transaction':

"The Reporting Persons think highly of the Issuer’s management team, strategy, and track record. While the Reporting Persons hold their stake for investment purposes, representatives of the Reporting Persons may continue to conduct discussions from time to time with management of the Issuer, and may conduct discussions with other stockholders of the Issuer or other relevant parties, in each case, relating to matters that may include the strategic plans, strategy, assets, business, financial condition, operations, and capital structure of the Issuer. The Reporting Persons may engage the Issuer, other stockholders of the Issuer or other relevant parties in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In addition to the foregoing, the Reporting Persons expect to conduct discussions with the Issuer and other relevant parties regarding strategic acquisitions by or joint ventures with the Issuer, or other similar arrangements. These discussions would be exploratory in nature and there is no assurance that they would lead to a definitive transaction."

Per Google Finance, Valeant Pharmaceuticals is "a multinational, specialty pharmaceutical company that develops, manufactures and markets a range of pharmaceutical products."

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