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Valeant Pharmaceuticals Intl Inc (VRX): ValueAct Keeps Its Promise and Buys More Shares

In a new filing with the Securities and Exchange Commission, Jeff Ubben‘s ValueAct Capital reported increasing its position in Valeant Pharmaceuticals Intl Inc (NYSE:VRX). The fund has acquired 210,000 shares in one transaction at a price of $142.25 per unit. Following the deal, ValueAct owns 19.13 million shares of the company. The stake is activist by nature and Mr. Ubben serves as a director on Valeant’s board.


A former managing partner at Richard Blum‘s Blum Capital Partners, Jeff Ubben applies a long-term approach to investments. ValueAct usually holds a concentrated equity portfolio with at most 15 positions and the average holding for each stake is about 3-4 years. However, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is an exception to this rule, as the fund has been holding shares of the company for more than 6 years. Meanwhile, the stock of the company surged by more than 1,800%. In this way, Valeant has been the second-largest holding in ValueAct’s equity portfolio in terms of value for the last several years. At the end of September, ValueAct took another step regarding its holding in Valeant with the appointment of Jeff Ubben to the board of directors.  In an earlier filing, the investor has also expressed his intention to further raise its exposure to the company, depending on the overall market conditions.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is a company that has been widely covered in the past several months in connection with its intent to acquire Allergan, Inc. (NYSE:AGN) together with activist investor Bill Ackman. Back in April, Pershing Square initiated a 9.7% stake in Allergan and announced a joint entity with Valeant to acquire Allergan. Valeant made a bid of $48.30 in cash and 0.83 shares of Valeant for each share of Allergan, but the proposal was declined by the latter. Even though, the entity has further pursued its intentions to acquire Allergan, it has failed as recently Allergan entered into an agreement to be acquired by the UK-based pharmaceutical company Actavis plc (NYSE:ACT). Pershing Square and Valeant have called a shareholder meeting, and after taking the case to the court, the parties settled and the meeting was set for December 18. On its part, Allergan has accused Valeant and Pershing Square of insider trading, but Mr. Ackman has denied the allegations.

Nevertheless, despite failing to acquire Allergan, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) still remains one of the leaders of the drug delivery industry. It is one of the largest companies in the industry in terms of market cap and it trails a P/E of 98.40, which is also one of the highest in the industry, and is significantly above the industry average.

However, during the third quarter, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has seen a decline in the bullish sentiment from investors. Out of more than 700 funds that we track, 89 funds reported holding long positions in the company, versus 96 funds in the previous quarter. Moreover, the aggregate value of the stakes held by the funds that we track declined by $2.22 billion to $10.81 billion. Stephen Mandel‘s Lone Pine Capital is another fund that is bullish on Valeant and increased its stake by 9% during the July-September period to around 10.99 million shares. On the other hand, Andreas Halvorsen‘s Viking Global cut its position by 16% during the same period to 9.97 million shares.

Disclosure: none

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