Ackman apologizes for
Valeant losses, calls bet a mistake
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[March 30, 2017]
By Svea Herbst-Bayliss
BOSTON
(Reuters) - Billionaire hedge fund manager William Ackman has apologized
to clients for betting on Valeant Pharmaceuticals International Inc,
telling them he was "deeply and profoundly sorry" for losing so much of
their money on the investment.
Ackman decided to sell his entire Valeant position earlier this month,
suffering a roughly $4 billion loss since having bought the stake in
early 2015.. He called the investment a "huge mistake."
"My approach to mistakes is that I personally assume 100 percent of the
responsibility on behalf of the firm," he wrote in the firm's annual
letter released to clients on Tuesday evening and seen by Reuters on
Wednesday.
The 50-year-old manager acknowledged the toll the bad bet has taken on
his image and said he misjudged the management team in place when he
bought the stock.
"We deeply regret this mistake, which has cost all of us a tremendous
amount," he wrote.
Thanks largely to Valeant's tumble, Ackman's hedge fund Pershing Square
Capital Management suffered back-to-back losses in 2015 and 2016 as his
reputation as one of the hedge fund industry's most talented investors
dimmed.
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Since launching the firm in 2004, Ackman has delivered a compound annual
net return of 14.8 percent. He tends to take concentrated bets and often
pushes management to perform better by urging spin-offs or other
measures.
Nonetheless the board of Pershing Square Holdings, Ackman's publicly
traded investment vehicle, decided after a review of his performance
that he should continue to manage the investments, Anne Farlow, the
chair, wrote in a separate letter.
She welcomed Ackman's openness in analyzing what led to the Valeant
failure.
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![](../images/033017pics/busine54.jpg)
William Ackman speaks during the Sohn Investment Conference in New
York May 4, 2015. REUTERS/Brendan McDermid
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In his
letter, Ackman laid some blame at the feet of Valeant's former management team,
which he had thought was building the next Berkshire Hathaway <BRKa.N>, once of
the most profitable companies in the country.
Ackman
met former Valeant Chief Executive Michael Pearson in 2014, when Pearson
enlisted Ackman's help to try and buy Allergan and Pershing Square bought up
Allergan shares to try and push that company's management into selling to
Valeant.
Allergan ended up selling to a Actavis, netting Ackman his best-ever returns
with his Pershing Square LP fund gaining 36.9 percent in 2014.
Ackman fired Pearson in 2016, however, after he got a seat on Valeant's board.
"Prior management substantially overpaid for the company's largest acquisition -
its acquisition of Salix - which occurred contemporaneously with the substantial
majority of our investment in the company," Ackman wrote.
Pershing Square Holdings has swung to losses of 2.5 percent after starting the
year with gains, but Ackman promised a quick recovery in the letter to clients.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker and Tom Brown)
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