Activist investor Bill Ackman broke all of his personal investment rules when he bet big on Valeant Pharmaceuticals. And now he’s calling the move “one very big mistake.”
As the Pershing Square Capital Management chief told CNBC’s “Squawk Box,” he “went off the reservation” with the Canadian drugmaker.
"We never normally get to meet the management of a company before making an investment. [And] we never invest in really complicated companies you can't figure out from just reading the 10-K [filing]," he said.
But those standards went out the window when Ackman and then-Valeant head honcho J. Michael Pearson joined forces to make a hostile play for Allergan in 2014, and Ackman continued to up his Valeant stake even in the wake of the buyout quest’s failure.
Of course, Valeant has since come crashing down, thanks to channel-stuffing allegations, pricing pushback and debt-default concerns--and Ackman has paid the price. He called the past 12 months the “worst period of performance” of his investment career, placing the blame squarely on Valeant’s downward spiral.
Those who played large roles in advising Ackman to take a chance on the Quebec-based drugmaker? They've paid it, too. Friday, Ackman said analyst Jordan Rubin--the last remaining player who had worked closely on the investment--was set to depart Pershing Square, Reuters reported.
Ackman, though, is still doing what he can to right the ship, and toward that end, he took on a more active role this March when he assumed a director position on Valeant’s board. And with a handful of changes already made to the company’s leadership--including the hiring of new CEO Joseph Papa, formerly the skipper at Perrigo, and of CFO Paul Herendeen, a Zoetis veteran--he thinks the company is in better shape than it was.
At the very least, Valeant now looks like a “more traditional Pershing Square investment” now that it’s taken a beating, he said.
"We normally invest when shareholders have lost confidence in management,” he told CNBC. “And that's what happened here.”
Valeant brings in Zoetis, Warner Chilcott vet as new CFO
Valeant under criminal investigation over Philidor ties: WSJ
Is Valeant really stabilizing? With Q2 misses, analysts aren't convinced
Valeant files overdue 10-K, makes sweeping board changes in push for turnaround
Activist Ackman vows to intervene after disastrous day at Valeant
Valeant investors, shocked by lightweight guidance, aren't buying CEO Pearson's recovery plans
Another snafu for Valeant as internal probe triggers restated earnings
Valeant shares nosedive on short seller's 'phantom sales' allegations