- Valeant's stock hit a 2.5-year low recently, trading as low as $70.32 after a series of major setbacks. However, despite the weakening stock, hedge fund owner Bill Ackman increased his stake in the company from 5.7% in September to 9.9 percent.
- Although the stock passed the $90 mark on Monday on news of Ackman's investment, it is still 51% lower compared to September levels.
- Bill Ackman's fund, Pershing Square Holdings, is down 19% for the year, in part because of the decline in the value of Valeant's stock.
While most investors seek to limit exposure to Valeant, Ackman has doubled down. Not only is he executing a 'buy low' strategy, but he is also publicly defending Valeant and its CEO, Michael Pearson.
It's been a dismal stretch for Valeant, from the Philidor debacle, to allegations of insider trading and widespread criticism of its pricing practices. It doesn't seem to be getting better either---aside from the impact Ackman's aggressive investing has had on the stock price.
Already under pressure from the market, Valeant now faces Congressional questioning. Recently, U.S. Rep. Elijah Cummings (D-MD) requested interviews with a group of Valeant execs who were supposedly connected directly to Philidor. Sen. Claire McCaskill (D-MO) has also joined the scrutiny. She vowed to look more deeply into Valeant's pricing practices, as well as its relationship with Philidor.
Ackman has a good track record of recognizing opportunities others missed. Perhaps that's why the stock lifted on news of his increased investment. Regardless, Valeant needs to put in a major effort to rehabilitate its standing.