Ackman's Pershing Square Trims Valeant Position for Tax Savings

  • Activist investor cuts his fund's stake to 8.5% from 9.9%
  • Shares battered by controversies over drug prices, pharmacies

Bill Ackman, the activist investor who has been a staunch defender of Valeant Pharmaceuticals International Inc., trimmed his fund’s holdings of the stock for tax reasons.

Ackman’s Pershing Square Capital Management sold about 5 million shares of Valeant in order to create a tax loss for investors in two accounts, according to a regulatory filing on Thursday. The fund retained its stake in two accounts that wouldn’t get the same tax advantage. Annual losses on investments can be used to lower investors’ total U.S. taxes in some cases, according tothe Internal Revenue Service.

Pershing Square disclosed last month that it had raised its stake in the company to 9.9 percent. After the stock sale, it now holds 8.5 percent, leaving it as the second-largest shareholder behind Ruane Cunniff & Goldfarb Inc., according to data compiled by Bloomberg. The sales began on Dec. 24, one day before Valeant disclosed that Chief Executive Officer Michael Pearson was being treated for severe pneumonia, and they continued every day this week.

Pershing Square spokesman Fran McGill declined to comment beyond the filing.

Valeant’s shares have been battered as the company faced criticism over price increases on older drugs and a now-terminated relationship with a mail-order pharmacy, Philidor Rx Services, that helped boost insurer reimbursement. Ackman has been a vigorous backer of the company. He spent four hours in October arguing that it was undervalued, to little avail.

Valeant fell 68 cents to $101.65 on Thursday in New York trading. The shares have plunged 61 percent since setting a record closing high of $262.52 on Aug. 5.

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