Ackman's Pershing Square Lightens Valeant Position For Tax Loss Purposes

Dec 15 2016 | 12:09am ET

Bill Ackman’s Pershing Square Capital Management has trimmed its stake in embattled Canadian drug company Valeant Pharmaceuticals from 9% to 7.8% in order to harvest losses for tax purposes.

The 3.5-million share sale, which came primarily from the hedge fund manager’s onshore Pershing Square accounts, were revealed in a securities filing on December 12, the same day Valeant announced the departures of three senior executives. 

Realizing losses this time of year is a common tactic for investors seeking to offset gains elsewhere in the portfolio and does not imply Ackman has undergone a change of heart regarding Valeant, which has plummeted 84% over the past year on pricing and accounting concerns, and is by far his worst performing position. 

Pershing’s Valeant position has $2 billion in value so far this year, according to the Wall Street Journal. Despite management changes, plans to sell assets to reduce debt and the involvement of Ackman on the board, Valeant remains near its lows and closed Wednesday at $14.78, slightly below the $14.85 per share Pershing averaged from the sale. 

After the transaction, Pershing’s filing shows the firm owns more than 27 million shares of Valeant, including those represented by call options, and remains its largest shareholder.

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