Bill Ackman Loses $321 Million in One Day as Valeant Plunges

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  • Ruane Cunniff leads pack with one-day loss of $525 million
  • Stock down 75 percent since reaching a peak last August

SEC's Valeant Probe: What Do We Know?

Even for the beleaguered shareholders of Valeant Pharmaceuticals International Inc., Monday was an unusually bad day.

The company’s biggest owner, investment firm Ruane Cunniff & Goldfarb, lost an estimated $525 million after shares of the drugmaker fell more than 18 percent yesterday, the biggest decline since October, according to data compiled by Bloomberg. T. Rowe Price Group Inc. had a one-day drop of about $324 million, and William Ackman’s Pershing Square Capital Management gave up $321 million on the common stock it owns. The estimates assume the investors still own the number of shares listed in their most recent regulatory filings.

Valeant tumbled after the company withdrew a financial forecast, delayed the release of fourth-quarter results and confirmed a previously undisclosed probe by the U.S. Securities and Exchange Commission that came to light after media inquiries. Valeant, which has been under scrutiny for its soaring drug prices, accounting and distribution practices, is down roughly 75 percent since its August peak and 35 percent in 2016 through Monday. Shares fell 5 percent to $62.49 at 12:07 p.m. in New York on Tuesday.

The latest drama at Valeant began on Sunday night, when the company announced that Chief Executive Officer Michael Pearson would give up his chairman title and return after a two-month medical leave.

“We are delighted that Mike’s health has recovered and he has returned as CEO so that he can now work on behalf of the company and shareholders,” Ackman said in a statement Monday to CNBC. Ackman said he expected that much of the uncertainty surrounding the company would be resolved in the “relative short term.”

Buying Valeant

ValueAct Management, an activist investment firm, lost about $223 million on Valeant shares on Monday, and hedge fund firm Paulson & Co. was down $198 million.

Many of the largest shareholders, including Ruane Cunniff, T. Rowe Price and Paulson, added to their holdings of Valeant in the fourth quarter, according to data compiled by Bloomberg. Pershing Square increased its stake this year. Its loss on Valeant doesn’t include declines it may have had on options it owns.

Ruane Cunniff is best-known for its $6.2 billion Sequoia Fund. The fund, which has had stellar performance since its creation in 1970, trailed 87 percent of peers last year, and 76 percent this year, as a result of the Valeant stake. The shares accounted for 25 percent of the fund as of Sept. 30.

Messages seeking comment to Ruane Cunniff, ValueAct and Paulson were not immediately returned. A spokesman for T. Rowe Price declined to comment for this story. Pershing Square spokesman Francis McGill declined to comment beyond Ackman’s statement.

— With assistance by Caroline Chen, and Cynthia Koons

(Adds Pershing options in paragraph seven.)
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