market folly

Bill Ackman's hedge fund firm Pershing Square took a passive 4.9% stake in Valeant Pharmaceuticals (VRX) according to a statement on March 9th.  And in more recent news, it looks like Ackman is set to increase that stake further.

Valeant recently announced it would sell around $1.45 billion in new shares to fund its takeover of Salix Pharmaceuticals (SLXP).  On the heels of that news, the Wall Street Journal reported the following: 

"Pershing Square Capital Management LP is buying 3 million shares in the offering worth about $600 million, according to a person familiar with the matter.  That would boost Pershing Square's stake in Valeant to above 5%."

Ackman previously worked with VRX to try and takeover Allergan (AGN).  That bid ultimately failed, and Actavis (ACT) scooped up AGN instead. 

In his effort to combine VRX and AGN, Ackman expressed that Pershing was looking to convert its AGN stake into VRX shares if that acquisition happened.  Since it didn't, Ackman simply went out and bought VRX shares instead, as he clearly likes their roll-up business model.

Pershing Square now joins a long list of other hedge funds as large holders of VRX.  As of the end of 2014, top VRX holders included: Ruane Cunniff & Goldfarb (Sequoia Fund), ValueAct Capital, Viking Global, Lone Pine Capital, Brave Warrior, JANA Partners, Maverick Capital, and Hound Partners, among many others.