Ubben Takes Big Profit From Valeant Pharmaceuticals International Inc. (VRX) Stake, Sells Over 4.3 Million Shares

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.


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Jeffrey Ubben
Jeffrey Ubben
ValueAct Capital

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.

Additionally, Valeant Pharmaceuticals International has recently announced the appointment of former McKinsey & Co employee, Robert Rosiello, as the next Chief Financial Officer (CFO) of the firm. In late April, the former CFO of Valeant, Howard Schiller, stepped down from the position after a period of exorbitant growth for the company. However, the tremendous expertise of the newly-assigned CFO in healthcare and M&A in particular will be of great value for the company. It is uncertain whether Robert Rosiello will follow the same growth-by-acquisition plan that has been previously employed, but nevertheless, it should be expected that Valeant will most probably benefit from the expertise, intellect and work ethic of the new CFO.

Let’s now go over Valeant’s financial performance delivered during the most recent fiscal quarter. Unquestionably, the company managed to deliver quite strong first quarter financial results. The revenues of the company reached a figure of $2.19 billion in the period, which marks an increase of 15% year-over-year. Valeant also reported a profit of $70.4 million during the quarter. At the same time, the company expects to generate revenues in the range of $2.96 billion to $3.08 billion for the second quarter of the current year, which is a clear sign that Valeant is on the right path. In spite of the fact that the stock has already achieved an immense gain since the beginning of the current year, some analysts believe that Valeant’s shares might reach a price level of $400 per share, which theoretically represents a 74% upside. Within our database of over 700 hedge funds, the largest shareholder in Valeant Pharmaceuticals International Inc. (NYSE:VRX) is Glenn Greenberg’s Brave Warrior Capital with 5.88 million shares valued at $1.17 billion as of March 31, 2015.

Disclosure: None