Activist hedge fund firm ValueAct Capital, has filed a 13D with the SEC revealing its ownership stake in Valeant Pharmaceuticals International Inc. (NYSE:VRX) has been cut to 4.4% of the Canadian pharmaceutical company’s outstanding common stock, consisting of 14.99 million shares. The hedge fund, managed by Jeffrey Ubben, has sold 4.39 million shares of Valeant since its most recent 13F filing for the reporting period of March 31.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 83 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
ValueAct Capital is a San Francisco-based hedge fund established by renowned activist investor, Jeffrey Ubben, in June of 2000. The investment management firm primarily invests in share re-purchase programs, public market recapitalizations, deleveraging equity injections, off-balance sheet financings and going-private transactions. Put differently, the main strategy the hedge fund has been employing since its inception is the acquisition of mismanaged companies and then attempting to work with the companies to improve their activities and operations. According to ValueAct’s most recent 13F filing, the fund manages a public equity portfolio worth $18.09 billion, with the fund’s largest public equity holdings being positions in Microsoft Corporation (NASDAQ:MSFT) and Halliburton Company (NYSE:HAL), owning 75.27 million shares of the former and 33.76 million shares of the latter.
Valeant Pharmaceuticals International Inc. (NYSE:VRX) is a multinational, diverse pharmaceutical company that is developing and selling prescription and non-prescription products worldwide. Expectedly, Valeant shares have skyrocketed by almost 59% year-to-date as the company has been consistently growing though strategic acquisitions (e.g. Dendreon Corporation and Salix Pharmaceuticals, among others) or through organic growth. Considering the fact Valeant has pursued quite a significant number of strategic acquisitions over the last few years, it is expected that the company will focus predominantly on organic growth in the upcoming months and years. Therefore, Valeant expects a massive number of product launches in the period of 2016 to 2017, so the outlook of the company is very solid. Analysts believe that Valeant will be able to deliver double-digit growth in its business operations over the next few years, assuming that the company executes its formulated plan successfully.