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Ackman: Valeant's main problem is PR, not fraud

October 30, 2015 at 10:58 am EDT

BOSTON (Reuters) - Hedge fund mogul William Ackman told his investors on Friday that he was confident in his bet on Valeant Pharmaceuticals (>> Valeant Pharmaceuticals Intl Inc) (>> Valeant Pharmaceuticals Intl Inc) but faulted the company for a weak response to fraud allegations that have sunk its stock.

He said during a teleconference that Valeant had made a "meaningful mistake" of underinvesting in its public relations and offered an insufficient response when short-seller Citron accused it this month of using phantom sales to boost its bottom line.

Valeant shares were last down 4.3 percent at $106.74 in New York trading.

The stock has lost a quarter of its value since Citron released its report last week accusing the Canadian company of improperly using its relationship with specialty pharmacies like Philidor to book revenue.

Valeant denied any wrongdoing in a conference call on Monday.

Valeant will sever all ties with pharmacy business Philidor Rx Services in the wake of criticism over the relationship between the two companies. CVS Health Corp and Express Scripts dropped Philidor from their networks on Thursday.

Ackman's Pershing Square Capital Management hedge fund is one of Valeant's top investors, and has lost around $2 billion on the bet since the start of the year.

Ackman said he believes Valeant's business is sound and that the share price will recover, possibly slowly due to the "complexity of the story." He said it should reach over $400 within three years.

Through Oct. 27, the Pershing Square Holdings portfolio was off 15.9 percent, a dramatic reversal after last year's 40 percent gain which ranked Ackman among the industry's best performers.

Valeant stock was trading as high as $260 per share in August. The next month, U.S. Democratic politicians singled out Valeant for hiking drug prices on consumers, and a federal subpoena followed. With the stock under pressure, the Citron report last week sent it into a tailspin.

(Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis and Nick Zieminski)

By Svea Herbst-Bayliss

Stocks treated in this article : Valeant Pharmaceuticals Intl Inc, Valeant Pharmaceuticals Intl Inc

Stocks mentioned in the article

	Add to a list Add to a list 0 selected To use this feature you must be a member Log in Sign up	Price	Change	5d. change	Capi.
	BAUSCH HEALTH COMPANIES INC	24.47 USD	-3.20%	+7.47%	3.14B
	BAUSCH HEALTH COMPANIES INC	32.25 CAD	-0.62%	+7.20%	3.14B

William Ackman

William (Bill) Ackman is the founder and CEO of Pershing Square Capital Management, an American hedge fund that holds shares in Wendy’s International and McDonald’s Corporation. As well it has interest in Target Corp., the second largest discount company in US.

Graduated at Harvard College, he holds also an MBA from Harvard Business School. He began his career working for his father in the real estate, and in 1993 he founded Gotham Partners Management Co. This investment company encounters some troubles including legal problems that will lead to its dissolution in 2003.

In 2004, William Ackman comes back on the financial stage. He has created Pershing Square Capital, and he showed a lot of activism buying massive share in the lowest price for resale in two years maximum. A short-term strategy often criticized by the US Medias. His different attacks against FSA, American division of Dexia, and also against MBIA and Ambac, that it forecast the collapse, earned him a strong enmity in financial world.

In 2007, William Ackman took a share up to 5 millions of dollar (3,5%) in Sears Holdings, third group in distribution sector in US, behind Wal-Mart and Home Depot.

Pershing Square Capital Management manages approximately 2.4 billion of dollar of which 40% was invested in shares of McDonald.

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Pershing Square Capital Management LP Pershing Square Capital Management LP Investment ManagersFinance Pershing Square Capital Management LP (PSCM) is an independent, SEC-registered investment advisor and hedge fund manager headquartered in New York City. The firm was founded in 2003 by William Ackman and David Berkowitz. PSCM provides investment advisory services to a variety of private investment funds.	Chief Executive Officer
Pershing Square Foundation	Founder

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