Activist investor, Bill Ackman, might have lost hope on Valeant Pharmaceuticals Intl Inc (NYSE:VRX) stock rising to its all-time highs, anytime soon. Through his firm Pershing Square Capital Management, the investor has slashed his investment in the embattled drug maker as uncertainty continues to grip the stock. In a regulatory filing, the firm says it trimmed its stake for tax reasons.
Ackman Sells 5 Million Shares
The firm sold about 5 million shares trimming stakes in the company from 9.9% to 8.5%. The selloff according to Ackman will help create tax loss for investors. In other words, losses on the Valeant shares are being used to offset taxes owed in other positions. By selling the shares, the firm has lost the opportunity to book any future gains on them.
Pershing Square has since retained stakes in two accounts which are not eligible for any tax advantage. In November, the firm took advantage of Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s plunge in the market to bolster its stake from 5.7% to 9.9%. Even with the latest sell-off, the investment firm remains the second largest shareholder in embattled drug maker just behind Ruane Cunniff & Goldfarb Inc.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares were a big disappointment last year having shed more than 70% in market value in the second half of the year. Criticism over illegal drug pricing practices has all but continued to dent the company’s image in the market. The situation was further exacerbated by the drug company severing ties with mail order pharmacy Philidor RX services.
Ackman Bullish on Valeant
Even with the struggles Ackman has remained a staunch supporter of the company going as far as increasing Pershing Square exposure in the stock. He spent four hours in October arguing why the stock was highly undervalued
Ackman’s backing seem to be paying off, as Valeant Pharmaceuticals Intl Inc (NYSE:VRX) continues to picks itself having issued a solid guidance for 2016. It has also signed a new distribution agreement with Walgreens Boots Alliance Inc (NASDAQ:WBA) considerably helping bolster the company’s sales expectations. The stock closed the year down by 22%.