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Bill Ackman Is The 'Unofficial Leader Of A Thundering Herd' That Lost Billions Of Dollars

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Bill Ackman Is The 'Unofficial Leader Of A Thundering Herd' That Lost Billions Of Dollars

Billionaire activist investor Bill Ackman has lost billions of dollars through his fund's large stake in Valeant Pharmaceuticals Intl Inc (NYSE: VRX) following the stock's nearly 85 percent collapse over the past year.

Ackman also holds a seat at Valeant's board of directors and testified in front of a Senate special committee on Wednesday. The activist investor's involvement in Valeant has earned him the title of the "unofficial leader of a thundering herd," according to the New York Times' "DealBook."

Related Link: Wells Fargo Analyst Discusses Valeant's "Apology Tour"

DealBook noted that several other major hedge fund players followed his lead and invested in Valeant. Other funds including Paulson & Company, Viking Global Investors and Braham Capital have also seen large losses. The publication suggested that by following the "leader," i.e., Ackman, major hedge funds are "chasing too few ideas," which underscores the "growing phenomenon of hedge fund groupthink."

"The bottom line is, hedge fund herding is not going away anytime soon," Andrew Karolyi, a professor of finance at Cornell University told DealBook. "If anything, we are now seeing the early signs that this type of hedge fund herding is spilling over into herding of large institutional investors. To the extent that that spillover grows and expands, then we will be concerned."

 

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