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Bill Ackman To Investors: 'Deeply And Profoundly' Sorry For The Valeant Fiasco

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Bill Ackman To Investors: 'Deeply And Profoundly' Sorry For The Valeant Fiasco

Hedge fund manager Bill Ackman first bought a $3.3 billion stake in Valeant Pharmaceuticals Intl Inc (NYSE: VRX) back in 2015 when the stock was trading north of $200 per share. He added to his position over the months, played a role in ousting its CEO and was given a seat on the board.

On March 13, 2017, Ackman cut his losses and sold every last share when the stock was trading around $12 per share for a total loss of around $4 billion.

Lessons Learned

Ackman is now sorry for his losses. According to a Bloomberg report, the hedge fund manager told investors in a letter that he is "deeply and profoundly" sorry for the $4 billion of losses. He also acknowledged that it was a "huge mistake" to invest in the pharmaceutical company.

Ackman suggested that Valeant's downfall was due in part to its costly acquisition of Salix Pharmaceuticals, Ltd. (previously traded (NASDAQ: SLXP)) for $11.1 billion in 2015. Nevertheless, Ackman owned up to the decision to invest in Valeant and suggested he misjudged Valeant's management and aggressive M&A strategy to fuel growth.

Ackman added in his letter that he learned from the very costly mistake, including the fact that even a superb management team is "capable of making significant mistakes."

"The highly acquisitive nature of Valeant's business required flawless capital allocation and operational execution, and therefore, a larger than normal degree of reliance on management," Bloomberg quoted Ackman as saying in his letter. "In retrospect, we misjudged the prior management team and this contributed to our loss."

Related Links:

Valeant's Post-Ackman Recovery Is Characterized By 'Less Money, More Problems'

What Happens To A Stock When An Activist Liquidates A Position?

 

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