The lesson of Bill Ackman's $3 billion loss on Valeant Pharmaceuticals

15 March, 2017, 01:21 | Author: Elaine Woods
  • Markets Insider

Shares of Valeant Pharmaceuticals International Inc. tumbled to their lowest level since 2009 Tuesday morning after hedge-fund titan William Ackman threw in the towel and sold his stake in the struggling drug company. Valeant Pharmaceuticals International Inc has a one bull (extreme weakness) technical rating because it's trading below the 10 day, 50 day and 200 day simple moving averages while the 10-day moving average is below the 50-day moving average and the 50-day moving average is below the 200-day moving average. A rating of 4 or 5 would represent a Sell recommendation. Kistler Tiffany Companies LLC now owns 5,567 shares of the specialty pharmaceutical company's stock valued at $137,000 after buying an additional 2,719 shares during the last quarter.

Revenues in the quarter fell 13% to $2.4 billion, versus $2.8 billion in the same quarter of 2015. He chose to give up on Valeant, a favorite among hedge-fund types before probes into its business practices, accounting and drug pricing caused a collapse in the shares, after a lengthy campaign to turn around the company and salvage his investment. Finally, Rodman & Renshaw reiterated a "neutral" rating and issued a $17.00 price objective (down from $23.00) on shares of Valeant Pharmaceuticals Intl in a research report on Monday, February 27th.

This Company belongs to Medical sector. In addition, Renaissance Technologies bought 2.91 million Valeant shares, Barclays Plc 1.31 million shares, and Millennium Management 1.25 million shares during the fourth quarter.

In hindsight, Ackman said he should have first sold off his shares of Valeant in 2015 when the Philidor scandal was revealed, Business Insider reported. The company beat the analyst EPS Estimate with the difference of $0.05.

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That long-term debt burden stood at almost $30 billion at the end of past year, and the $2.1 billion earned through the latest sales will barely make a dent in it.

Ackman then told CNBC that he sold his stake because it wouldn't "move the needle for Pershing Square, even if the stock doubled from here". The Market Capitalization of the company stands at 4.28 Billion.

Ackman generally buys large stakes in a handful of big companies and agitates for changes and transactions. Valeant Pharmaceuticals Intl has a 52-week low of $11.36 and a 52-week high of $70.43. During the twelve month it lost -82.59% and year to date performance of -16.60%. The retailer expects losses of $0.07 to $0.15 per share for the quarter, and that disappointed investors who had hoped that Tilly's would be able to generate more positive momentum coming out of the holiday shopping season.

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