With New Valeant Pharmaceuticals Intl Inc (VRX) Stake, Bill Ackman Maintains Large Exposure to Healthcare Sector

Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock has gained 50% over the last 52 weeks amid its attempts to buy Allergan and recent plans to acquire Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) for $11.1 billion. Valeant launched its offer to acquire Salix in February, but had to later raise the proposed price by 10% to $173 per share in cash after Endo Pharmaceuticals stepped in with another offer, which amounted to $175 in cash and stock. Salix’s board already expressed its support for Valeant’s new offer, and Endo has withdrawn its bid.

Moreover, the company is one of the favorite healthcare stocks among hedge funds as the latest round of 13F filings showed. One of the largest shareholders of Valeant was Jeffrey Ubben’s ValueAct Capital, which owned 19.38 million shares as of the end of 2014. In addition, Mr. Ubben was recently appointed to the company’s board of directors.

Mr. Ackman is considered one of the best activist investors, who over the years has embarked on several campaigns and proxy fights with companies like Canadian Pacific Railway Limited (USA) (NYSE:CP), Target Corporation (NYSE:TGT), and J C Penney Company Inc (NYSE:JCP). Of late, aside from pursuing the takeover of Allergan, Mr. Ackman has also been campaigning fiercely against Herbalife Ltd. (NYSE:HLF), claiming that the company is a pyramid scheme and will be shut down at some point.

Mr. Ackman still remains convinced of Herbalife Ltd. (NYSE:HLF)’s illegal business practices and in a recent report, Pershing Square stated that it remained confident that the company will either collapse or will be shut down by regulators. However, Mr. Ackman’s substantial short position in the company took a minor hit recently as the stock jumped by 25% over the last month, amid a dismissal of a lawsuit launched by Herbalife shareholders, who brought a claim against the company in an attempt to recover some monetary damages on the back of Herbalife’s stock declining after scrutiny by the government. Herbalife Ltd. (NYSE:HLF)’s stock is still down by 41% over the last three years.

Pershing Square generated average annualized returns of more than 20% since its inception in 2004. In October, Mr. Ackman took Pershing Square public on Euronext Amsterdam and the stock has gained more than 22% since the IPO.

Disclosure: None