Ackman: Valeant's main problem is PR, not fraud
By Svea Herbst-Bayliss
BOSTON (Reuters) - Hedge fund mogul William Ackman told his investors on Friday that he was confident in his bet on Valeant Pharmaceuticals (VRX.N: Quote)(VRX.TO: Quote) but faulted the company for a weak response to fraud allegations that have sunk its stock.
He said during a teleconference that Valeant had made a "meaningful mistake" of underinvesting in its public relations and offered an insufficient response when short-seller Citron accused it this month of using phantom sales to boost its bottom line.
Valeant shares were last down 4.3 percent at $106.74 in New York trading.
The stock has lost a quarter of its value since Citron released its report last week accusing the Canadian company of improperly using its relationship with specialty pharmacies like Philidor to book revenue.
Valeant denied any wrongdoing in a conference call on Monday.
Valeant will sever all ties with pharmacy business Philidor Rx Services in the wake of criticism over the relationship between the two companies. CVS Health Corp and Express Scripts dropped Philidor from their networks on Thursday.
Ackman's Pershing Square Capital Management hedge fund is one of Valeant's top investors, and has lost around $2 billion on the bet since the start of the year.
Ackman said he believes Valeant's business is sound and that the share price will recover, possibly slowly due to the "complexity of the story." He said it should reach over $400 within three years. Continued...