Short Seller Andrew Left Says Valeant’s a Buy as Funds Exit

Andrew Left: Valeant May See Higher Before It Sees Lower
  • Left says Valeant is ‘priced right now like it’s over’
  • Funds like Jana, T. Rowe Price, Brahman sold last quarter

Andrew Left, the short seller whose report on Valeant Pharmaceuticals International Inc. triggered the drugmaker’s tailspin, is a buyer of the stock now that many funds are exiting.

“I’m long for a trade,” Left said by telephone, confirming comments he made earlier to the “Valeant is priced right now like it’s over.”

His comments boosted the shares 4.4 percent Monday -- reversing earlier losses as funds including long-time investor Brahman Capital, Jana Partners and Stephen Mandel’s Lone Pine Capital said they sold their holdings last quarter.

Left is seeing an upside now that Valeant has slumped about 90 percent since its August 2015 peak, and a new chief executive has taken over to attempt a turnaround. Still, he owns some downside protection in the form of “out-of-the-money puts,” which are exercisable at a price that is lower than the current price.

Left, the owner of Citron Research, published a report in October that said Valeant had an Enron-like strategy of recording fake sales using an affiliated pharmacy. While the drugmaker denied the allegations, it severed its relationship with the pharmacy and faced months of turmoil amid scrutiny on its accounting and drug pricing. They culminated in former CEO Mike Pearson’s departure last month.

Shares of Valeant, which peaked at $262.52 in August, closed at $27.05 in New York.

Bill Ackman

Among Valeant’s buyers last quarter was -- less surprisingly -- activist investor Bill Ackman, who’s now a board member and has defended the drugmaker even as the falling shares dragged down the results of his Pershing Square Management’s results. Pershing, one of Valeant’s biggest shareholders, lost 25.6 percent in the first quarter, primarily because of Valeant.

Appaloosa Management also added a $25 million Valeant position as of March 31.

Funds that disclosed selling Valeant shares during the first quarter included T. Rowe Price, Grantham Mayo Van Otterloo & Co. and Viking Global, according to regulatory filings Monday.

Earlier on Monday, the drugmaker said it would increase the discounts to hospitals on two heart drugs that were at the center of congressional investigations on pharmaceutical price hikes, one of the first moves by new Chief Executive Joe Papa to revive the drugmaker.

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