Bill Ackman is a board member of Valeant Pharmaceuticals (VRX), Canadian Pacific Railway (CP), and Howard Hughes (HHC). Valeant Pharmaceuticals has remained in the top five holdings of Ackman’s company, Pershing Square Capital Management. Pershing is the largest investor in VRX, with 21.5 million shares worth $654.1 million.
VRX constitutes 8.7% of Pershing’s portfolio. Of VRX’s total outstanding shares, Pershing holds 6.3%. The stock has provided a poor performance over the past year. Year-to-date, the stock has fallen by nearly 70% as of September 8, 2016.
In August 2015, the company boosted the prices of two of its major drugs by 212% and 525%, respectively. At that point, Citron Research, a California-based short-selling research company, alleged that Valeant had committed accounting fraud. These issues have continued to put downward pressure on the stock.
Ackman believes that the company’s core business and its underlying franchises are strong, and that Valeant is simply suffering from uncertainty. It has $10 billion in non-core assets, which will likely help it to increase its valuation.
Recently, Valeant’s CEO Joseph Papa spoke with CNBC and discussed the possible sale of Valeant’s assets to reduce the company’s debt. He also said that Bill Ackman was a wonderful source of information. Valeant’s management is trying to reestablish the company in the market (VFINX) (VOO) (QQQ).
Ackman believes that Herbalife’s (HLF) business model isn’t a lucrative one. Ackman stated, “Herbalife is an illegal pyramid scheme.” In 1Q15 and 2Q15, the company incurred $2.1 million and $4.8 million in expenses, respectively, related to FTC (Federal Trade Commission) inquiries indicating that the company had channeled meaningful expenses toward regulatory inquiries.
Ackman said, “The reality is fraud continues at Herbalife. I can’t see any situation which is good for Herbalife.” He continues to keep his short position on the stock.
On July 15, 2016, the company announced that it had reached a $200 million settlement agreement with the FTC, resolving its multiyear investigation of the company and leaving the company’s business model unchanged. However, Ackman is continuing his bet against Herbalife, even after the FTC settlement.
On August 26, 2016, Herbalife’s stock tumbled after Ackman said that its leading investor Carl Icahn was trying to sell his stake in Herbalife (HLF).
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