Highly-scrutinized activist investor Bill Ackman is no longer on the list of the top 20 best-performing hedge fund managers, after Pershing Square Capital Management L.P. posted a net-of-fees loss of 20.5% in 2015 (the list measures the amount of money that hedge fund managers have made for their investors since the inception of their funds). Thinks have not improved any in 2016, as Mr. Ackman’s activist hedge fund has lost an additional 25.6% during the first quarter of the year, as revealed by a performance report posted on the fund’s website on Friday. This disappointing performance was the collective result from long positions in 11 companies as well as one short position. Data compiled by Insider Monkey shows that Pershing Square’s eight holdings on December 31 in companies with a market capitalization of at least $1.0 billion generated a weighted average loss of 10.9% for the quarter, based on the size of those positions at the beginning of the first quarter. Obviously, much of the activist hedge fund’s losses can be attributed to battered drugmaker Valeant Pharmaceuticals Intl Inc. (NYSE:VRX), so let’s take a look at the performance of tha stock during the first quarter, as well as four other stocks owned by Pershing Square.
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#5 Valeant Pharmaceuticals Intl Inc. (NYSE:VRX)
– Shares Owned by Pershing Square (as of December 31): 16.59 Million
– Value of Pershing Square’s Holding (as of December 31): $1.69 Billion
– Q1 Return: -74.1%
Pershing Square owned a total of 16.59 million shares of Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) at the end of December, which were valued at $1.69 billion. Fresh 13D filings with the SEC show that Mr. Ackman’s fund now owns 30.71 million shares of the drug company, which constitute 9.0% of its total outstanding shares. This stake includes 21.59 million shares of common stock, a 5.00 million share increase to its long position, as well as an additional 9.12 million shares underlying over-the-counter American-style call options. Valeant’s shares have lost 85% in the past 12 months, after politicians attacked the drugmaker for gouging customers with unfounded price increases for its drugs and short-sellers condemned the company’s relationship with Philidor and pinpointed accounting irregularities associated with that relationship. The shares of the Canadian drugmaker have been under even more pressure this year after the company issued disappointing guidance for the current year, which raised the prospect that Valeant may default on its enormous debt should the company fail to file its Form 10-K and Form 10-Q. The recent appointment of Mr. Ackman to the company’s Board of Directors and the departure of Chief Executive Mike Pearson have done very little to restore investors’ confidence in the battered company. Jeffrey Ubben’s ValueAct Holdings L.P. owns 14.99 million shares of Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) as of the end of December.
The following two pages discuss the performance of Mr. Ackman’s top four stock picks during the first quarter.