Valeant Pharmaceuticals

Bill Ackman, the head of Pershing Square Capital Management, is still confident with the leadership of Michael Pearson, the CEO of Valeant Pharmaceuticals (NYSE:VRX) although the company’s stock price continues to slide amid allegations of accounting fraud.

The activist investor expressed his confidence with Pearson after a report from the Wall Street Journal quoted him telling to Valeant lead director Bob Ingram, “If Mike hides in the bunker on this, he can’t be CEO.”  Ingram responded that an investigation on the issue is ongoing, which is the reason why Pearson could not discuss it.

The Wall Street Journal obtained a copy of Ackman’s e-mail to Pearson today, which reads:

In light of recent press reports, I thought it would be helpful for me to communicate my thoughts on your leadership of Valeant.  We share the board’s confidence in you and your leadership.

While I have strong views on Valeant’s communication strategy and would have taken a different approach, you and the board should not interpret this as a negative reflection on my view of you as the CEO of the company.  I understand that the company’s counsel and the board may have different views on what can be communicated in light of regulatory scrutiny.  This is indeed a judgment call, and I respect the board’s decision in this regard.

Valeant stock price plummets

The stock price of Valeant plummeted almost 15% to $78.75 per share today. It was the sixth trading day the stock declined at least 10%.  The company lost more than 51% of stock value over the past month.

Currently, Valeant has approximately $31.46 billion market capitalization, down from more than $80 billion in August.

Wally Weitz, Barry Rosenstein sold stake in Valeant

Today, there were speculations that one of the largest shareholders of Valeant sold out its stake in the company.

Weitz Investments, the investment management firm founded by Wally Weitz, who also serves as its CIO, recently sold out its stake in Valeant. According to the firm,

“Valeant was a very profitable investment for our funds over the past four years. As of the September quarter-end we had significantly reduced our positions. Recent developments about the company’s pharmacy relationships, pricing policies and business practices led us to sell our remaining shares in late October. We no longer own Valeant in our client portfolios or mutual funds,” according to the firm.

On the other hand, Jana Partners, the hedge fund headed by Barry Rosenstein, disclosed in its quarterly letter to investors that Valeant was the biggest positive contributor to its performance year-to-date. However, the hedge fund sold its position in the company in September when Hillary Clinton questioned the drug pricing practices of pharmaceutical companies.

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