Value Investor Wally Weitz Sells Off Remaining Valeant Stake

  • Statement cites drug company's pricing, business practices
  • Firm calls investment ``very profitable'' over four years

Wally Weitz, a value investor from Warren Buffett’s home town of Omaha, Nebraska, said his firm exited its remaining investment in Valeant Pharmaceuticals International Inc.

“Recent developments about the company’s pharmacy relationships, pricing policies and business practices led us to sell our remaining shares in late October,” Weitz’s firm, Weitz Investment Management, said in a statement posted Monday on its website.

Valeant, the once high-flying stock that’s a longtime darling of star money managers including Bill Ackman, has lost more than half its value since its all-time peak in August after the company was accused by a short-seller last month of using mail-order pharmacy Philidor RX Services LLC to inflate sales. Valeant has denied the claims. 

Weitz said Valeant was “a very profitable investment” for the firm’s funds over the past four years, and that it had already reduced its holdings in the drug company. Valeant was the firm’s third-largest holding as of June 30, according to a regulatory filing. The money manager, which oversees 10 mutual funds, held about 717,000 shares as of that date, valued at $159.2 million.

BlueMountain Capital Management, a longtime holder of Valeant, told its clients that it sold its holdings of a specialty drug company in October. The hedge fund didn’t name the company, but said it decided to sell after the shares plummeted and Democrats in the U.S. House of Representatives sought to have the company subpoenaed over price increases for its drugs. On Sept. 28, Democratic representatives in a letter urged Jason Chaffetz, the chairman of the House’s committee on oversight and government reform, to subpoena Valeant.

Valeant’s largest shareholder, the New York-based investment firm Ruane Cunniff & Goldfarb, last week defended its investment in the stock in a letter to shareholders. Ackman, the founder of Pershing Square Capital Management, also backed Valeant in an Oct. 30 call with investors.

Charles Munger, Buffett’s longtime business partner, in a Saturday interview with Bloomberg called Valeant’s practice of acquiring rights to treatments and boosting prices legal, but “deeply immoral,” and “similar to the worst abuses in for-profit education.”

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