Bill Ackman's Pershing Square announced on Monday, March 13 that it had sold its final stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX). CEO Bill Ackman and Vice Chairman Steve Fraidin will continue to be a part of the drug maker's board until the company's upcoming annual meeting. However, the two will not stand for re-elections. Consequently, VRX shares traded in red and plunged 9.41% in late trading yesterday.
While it is unclear how much the firm lost on the investment, it is expected to be in multi-billion dollars. The final stake was sold at $11 per share whereas the shares stood at $200 when the firm first announced its investment in the calendar year 2015 (CY15). Moreover, the last liquidated shares' value went from roughly $5.45 billion to less $300 billion, which represents a loss of about $5 billion.
Valeant's position represented about 1.5-3% of total Pershing Square funds. However, the investment required an unreasonably large amount of resources and time. Therefore, the firm thought it was best to sell the investment, resulting in a huge tax loss. Nonetheless, this would Pershing Square to dedicate more time to their existing investments alongside new investments opportunities.
Both Bill Ackman and Steve Fraidin have worked effortlessly to stabilize the $4.36 billion company, from refreshing senior management and board of directors to paying down Valeant's debt by selling non-core assets. They also recognize CEO Joseph Papa's efforts in setting a new course for the beleaguered drug maker and streamlining their focus. Moreover, the duo wishes well for the company and its employees as they part their ways.
Regardless of this development, investors continue to be bullish. The analysts' ratings include three Buy, one Overweight, 14 Hold, one Underweight, and three Sell. Valeant's 12-month average price target also stands at $19.31, with about 60% upside potential factored in over the last close.