Ackman's Pershing Square Sells 5M of Valeant Stock To Generate Tax Loss

Citing tax reasons, Bill Ackman, the activist investor and a strong defender of Valeant Pharmaceuticals International, has reduced his firm's stake in the drug company. JPMorgan Chase & Co. dropped their price objective on shares of Valeant Pharmaceuticals Intl from $265.00 to $225.00 and set an "overweight" rating for the company in a research note on Wednesday, November 11th. The year prior, Pershing Square gained 40 percent, establishing him as a "rock star" in the hedge fund space; that was primarily driven by Allergan's skyrocketing share prices as Ackman applied pressure on the company to sell itself to Valeant. The increased-stake decision was taken to derive advantage of the beaten-down market for the stock. Shares tumbled 12 percent. Pershing Square has sold the shares in order to generate a tax loss for investors in two of its funds, and this move would lower investors' 2015 taxes.

Valeant drew attention in Washington after The Wall Street Journal reported in April the company raised the prices of two cardiac-care drugs by 525% and 212%, after acquiring the rights to the medicines in February. Mr. Pearson also held an investor day for the company late in December, in which he promised double-digit, same-store organic growth from the business to continue from next year, fueled by volume sales. Valeant has broken its ties with the company and formed its board committee.

Valeant Pharmaceuticals International, Inc.is a specialty pharmaceutical and medical device company. The company had revenue of $2.79 billion for the quarter, compared to analysts' expectations of $2.06 billion. Valeant also needs continued support of activists like Mr. Ackman to convince investors of its transparent and fair business practices, especially when the extent and size of the Philidor-like controversy still remains unclear.

With the selloff, Pershing Square owns 29.1 million Valeant shares, or 8.5 percent of the company; this is down from the previous 34.1 million shares, or 9.9 percent.

Shares of Canada's largest publicly traded drug company fell about 10 per cent Monday in NY to close at $102.14 (U.S.) following Valeant's announcement that Pearson was being treated in hospital for pneumonia.

Pershing Square sold shares in its two onshore portfolios to generate a tax loss for their investors while the two offshore portfolios did not sell any shares, the filing said. The tax-loss selling occurred in the fund's two on-shore portfolios, while the firm's off-shore vehicles maintained their exposures, the filing revealed. A representative from Valeant wasn't immediately available for comment, told the WSJ. As of the close of business on Thursday, the investment for Pershing had a $2.96 million value. Following the purchase, the director now directly owns 15,532 shares in the company, valued at approximately $2,820,611.20.

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