Ackman bails on Valeant, losing $3 billion

Ackman bails on Valeant, losing $3 billion

Valeant Pharmaceuticals stock closed down 11% in the wake of news that longtime shareholder Bill Ackman of Pershing Square Capital Management had sold off his stake in the beleaguered drug company.

Valeant shares fell to $11.14 after the market closed in NY, down 8 percent from their closing price. Stock has got OUTPERFORM rating from 12 analysts of Thomson Reuters, 2 analysts given HOLD rating to the stock. The billionaire and his hedge fund have been particularly outspoken about the promise of Valeant, even hosting a multi-hour call for journalists and analysts in November 2015 defending the company. Ackman bought into Valeant when the stock was trading near US$190 a share and he watched it surge to US$260 a share during the summer of 2015.

Last April, Ackman testified before a Senate committee about Valeant's much-maligned strategy of buying niche drugs and raising their prices by as much as 3,000 per cent.

The investment, which represents about 1.5 percent to 3 percent of Pershing Square's funds, required "a disproportionately large amount of time and resources", the statement said.

CEO Michael Pearson steps down as investor Bill Ackman joins the board. Meanwhile, among specific names in focus are drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX), shoe retailer DSW Inc. According to Bloomberg, Pershing Square purchased shares at an average cost of $166.11 a share.

The maker of weight-loss shakes and supplements reached a $200 million settlement with the U.S. Federal Trade Commission past year and agreed to make sweeping changes to settle claims it deceived consumers with get-rich-quick promises. Davis Selected Advisers now owns 7,304,762 shares of the specialty pharmaceutical company's stock valued at $147,118,000 after buying an additional 64,425 shares during the period.

For the quarter ending 11/08/2016, The Analyst projected that the company could deliver EPS of 1.75 while the company provided its Actual EPS of 1.55 showing a difference of -0.2 Percent between the Estimated and Actual EPS.

Considering the performance, Valeant Pharmaceuticals International, Inc.

Analysts are also projecting an Average Revenue Estimate for Valeant Pharmaceuticals International, $2.17 Billion in the Current Quarter. Carl Domino Inc acquired a new stake in Valeant Pharmaceuticals Intl during the third quarter worth $225,000.

But the company had a slew of misses as well - losing a bid for Cephalon in 2011, failing to close a $13 billion merger with Actavis in 2013 and ultimately losing out on Allergan in 2014.

In the end, you all know that I think Herbalife's settlement with the FTC and the new unproven business model it's had to implement since then is likely to cause big problems with the company's earnings expectations for the next couple years.