Ever-loyal Ackman raises stake in embattled Valeant

William Ackman

Many Valeant ($VRX) investors have fled in recent weeks as the company was hit with drug pricing controversy, subpoenas and allegations that it used its relationship with specialty pharmacy Philidor to inflate its top line. But not Bill Ackman's Pershing Square Capital Management. In fact, Ackman--who has stood by the Canadian pharma and its CEO, J. Michael Pearson, throughout the hullabaloo--has upped his stake in the company further.

Pershing Square now holds a 9.9% piece of the pie, Bloomberg reports; that's up from a 5.7% holding Ackman's firm disclosed in September. Following a series of transactions beginning last month, Pershing Square's various funds have now racked up more than 34.1 million Valeant shares.

Those shares rose nearly 4% Monday on the news, the news service notes, hitting $90.60. That's up quite a bit from the 2.5-year low they reached recently--$70.32--but they've still sunk 51% since the end of September. And Pershing Square Holdings, the hedge fund's publicly traded security, is suffering as a result, down 19% for the year.

Ackman--a longtime Valeant enthusiast who last year hooked up with the Quebec-based pharma in its hostile pursuit of Allergan ($ACT)--has done his fair share to rally support around the company recently. In addition to hosting an hours-long investor conference call in late October, he defended Pearson earlier this month, writing him to express "confidence in you and your leadership."

But Valeant still has its fair share of issues to contend with. Last week, U.S. Rep. Elijah Cummings (D-MD) wrote to Pearson requesting interviews with a group of Valeant execs who allegedly had direct dealings with Philidor. Sen. Claire McCaskill (D-MO) has also pledged to look into both Valeant's pricing practices and its dealings with the specialty pharmacy.

And that's just the tip of the iceberg. In the wake of cutting all ties with Philidor, Valeant said its sales will suffer as it looks to find a replacement relationship. And recently, a U.S. judge ordered the company--as well as Ackman--to face an insider trading suit over their Allergan bid.

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